Collapse in state pride leads consumer confidence to lowest level in 20 years
Thursday, 16 March 2017
Pride in South Australia has plunged to its lowest level in 20 years, driving confidence amongst South Australian consumers to a worrying low, according to the latest BankSA State Monitor.
Consumer confidence has dropped for a second consecutive survey period and is now at its lowest level since State Monitor reporting began in 1997. Since the last State Monitor in November, consumer confidence has decreased from 102.1 points to 97.8, placing it well below the 100-point baseline.
State pride, one of the 10 key measures of the State Monitor which has historically remained high despite fluctuations in overall confidence amongst consumers, has plummeted almost 40% to register its lowest ever result at just 31%. The mood amongst consumers or how they feel about their household situation also decreased dramatically by 25% to only 6%, again the lowest ever result.
BankSA Chief Executive, Nick Reade, said that South Australia was facing a number of serious challenges such as energy security that need to be addressed and this was beginning to have a significant effect on how South Australians were feeling about their own situation and the state overall.
“South Australians are justifiably starting to feel embarrassed about how we are perceived and the impact this may have on our ability to be competitive and grow going forward,” he said.
“It’s really important that we face into these challenges and respond quickly and decisively so that the current mood does not become further entrenched in the psyche of South Australians.
“For this reason, while it is a complex and multi-faceted issue, it is important that the State Government announced a plan to address electricity reliability, for example.”
Mr Reade said it was also important to acknowledge that the survey did show some areas of positivity with consumers spending more, and planning to continue to spend more in the immediate future, on major purchases.
Consumer purchase indicators are at historically high levels, with the percentage of people who have made a major purchase in the past three months – such as real estate, cars, holiday travel or whitegoods – rising to a five-year high (46%) and consumers intending to make a major purchase over the next three months increasing to its highest level in 20 years (38%).
“This was also reflected in the January national retail figures that show retail sales in South Australia were only surpassed by the ACT and Victoria,” said Mr Reade, “and by sector, household goods retailing was the strongest.”
Business confidence fell by 4.1 points, from 108.1 to 104.0, for the survey period.
“While business confidence has softened this survey, net confidence is higher among business owners about their own business prospects in the next 12 months,” said Mr Reade.
“There are a number of good indicators that should not be overshadowed. For example, the Fringe festival and other events that create significant economic benefit, the creation of 8,300 jobs in the 12 months to January, including the second highest rate of jobs growth nationally in December, solid local real estate performance, and some industries that are performing solidly, such as premium food, tourism and professional services.”
Other findings from the latest BankSA State Monitor include:
- The decrease in consumer confidence has been driven by negative results in the 25-34 and 50-plus age groups, as well as females, blue collar workers and rural-based respondents.
- Young people in the 18-24 age group are the most optimistic about South Australia.
- Consumers remain pessimistic that that the climate for spending will improve over the coming 12 months.
- There was a slight increase in confidence among consumers about being able to find alternative employment if they wanted to change jobs.
- The decrease in business confidence has been driven by negative results among the agriculture and construction sectors, as well as mid-sized SME businesses.
- Businesses were generally more confident about the future, with a decrease in respondents recently affected by or worried about a possible future downturn in turnover.
South Australia’s rural regions reported a mixed result with consumer confidence declining for the second consecutive survey, dropping 7.0 points from 99.5 to 92.5. Overall business confidence grew by 4.0 points, from 102.1 to 106.1. Specific findings from the rural regions include:
West and North (Upper Spencer Gulf, Far North and Eyre Peninsula):
- A decrease in consumer confidence – down 2.7 points from 90.9 to 88.2 (extending to nine consecutive surveys its position below the 100-point baseline); and
- An increase in business confidence – up 6.1 points from 99.1 to 105.2 (recording its third consecutive increase).
Southern (South Coast, South East, Hills and Murray Plains):
- A decrease in consumer confidence – down 1.3 points from 105.1 to 103.8 (making it the only region above the 100-point baseline); and
- A decrease in business confidence – down 4.8 points from 110.0 to 105.2.
Mid North and Riverland (Barossa, Mid North, Riverland and Yorke Peninsula):
- A decrease in consumer confidence – down 20.9 points from 106.4 to 85.5 (the region’s largest ever drop and its lowest ever result); and
- An increase in business confidence – up 13.0 points from 95.7 to 108.7.