South Australia follows national trend as consumer confidence falls to record low
Saturday, 26 October 2019
Consumer confidence in South Australia has followed a downward national trend and fallen to a record low, according to the latest BankSA State Monitor.
Conducted by an independent research firm since 1997, the BankSA State Monitor shows that consumer confidence in SA dropped by 8.6 points between July and October this year, from 103.8 points to 95.2.
The fall in the consumer confidence index is due to a decrease in a range of measures, including increased pessimism about the climate for consumer spending over the next 12 months, as well as lower intention to make a major purchase over the next three months such as real estate, cars, whitegoods and holidays.
The latest index also shows a large decline in how consumers feel about their own household situation, lower confidence about their ability to change jobs, and weakened state pride.
Unemployment levels, rising petrol prices, wages relative to cost of living and global uncertainty were amongst the factors cited for the diminished consumer sentiment.
In addition to the decrease in consumer confidence, business confidence in South Australia has also fallen, by 10 points from 115.2 to 105.2, but still remains relatively positive despite the recent downward trend.
In fact, business intention to expand and grow jobs in the immediate future has increased for the second survey in a row.
BankSA Chief Executive, Nick Reade, said the state’s fall in confidence was not an outlier, but reflected what we are seeing more widely.
“Australia’s economic growth rate is at its slowest rate since the global financial crisis, and unfortunately, the South Australian economy is not immune to national pressures,” he said.
“There is growing pessimism about the general climate for consumer spending, which is being fuelled by a lack of wages growth and rising household costs, including petrol prices, power bills and council rates.
“This uncertainty in homes is resulting in more people ‘sitting tight’ for the time-being, which is evidenced by planned spending restraint in households in coming months.
“It appears that recent tax and interest rate cuts have been outweighed by consumer concerns about the economy and their own financial position and employment prospects.
“This is consistent with our own research that has previously shown the prevailing mood of both consumers and businesses in response to economic stimulus, such as interest rate cuts, was to reduce debt and build savings, rather than to spend or borrow more.
“Local businesses are also under pressure, although confidence levels still remain in positive territory according to the State Monitor index, which is encouraging.
“It’s particularly encouraging that South Australian business owners do intend to create additional employment in the coming months for the second consecutive survey, despite reporting less confidence about the climate for doing business over the next 12 months on the back of the local, national and global economic outlook.”
Other key findings from the latest BankSA State Monitor include:
Factors contributing most to consumer pessimism: petrol prices, unemployment levels, wages relative to cost of living, world affairs, and political leadership in Australia.
- Factors contributing most to business pessimism: petrol prices, world affairs, newspaper headlines, future of the Murray, and media reports on business confidence;
- Confidence of consumers aged 35-49 and 65-plus has dropped to its lowest ever level;
- Males are more confident than females for the ninth consecutive survey;
- Consumers aged 18-24 remain the most confident age segment in South Australia;
- Finance, community service, manufacturing and wholesale/retail industries reported the largest falls in confidence among South Australian businesses; and
- Recreational was the only industry to report an increase in business confidence, and with agriculture, are the two most confident sectors in the state.
BankSA State Monitor results for regional South Australia reflect the overall survey results, with consumer confidence in rural parts of the state falling 6.8 points, from 98.9 to 92.1, while business confidence dropped 6.0 points, from 108.3 to 102.3. Findings for South Australia’s rural regions include:
West and North (Upper Spencer Gulf, Far North and Eyre Peninsula):
- A decrease in consumer confidence – down 3.6 points from 94.9 to 91.3 (extending lower results for the region for the fourth consecutive survey); and
- A decrease in business confidence – down 1.9 points from 106.3 to 104.4 (but still recording its sixth consecutive confidence result above the 100-point baseline).
Southern (South Coast, South East, Hills and Murray Plains):
- A decrease in consumer confidence – down 14.8 points from 108.4 to 93.6 (still the most confident rural region despite reporting the largest fall this survey); and
- A decrease in business confidence – down 3.1 points from 112.1 to 109.0 (but remains the most confident rural region in the state for the eighth consecutive survey).
Mid North and Riverland (Barossa, Mid North, Riverland and Yorke Peninsula):
- A decrease in consumer confidence – down 1.5 points from 92.0 to 90.5 (its third consecutive fall and remaining the least confident rural region in the state); and
- A decrease in business confidence – down 9.7 points from 103.8 to 94.1 (remaining the least confident rural region in the state).