Flooding Depresses Australian Consumer Confidence

The decline in Australian consumer confidence was caused by flooding that hit parts of Queensland and New South Wales.

On Wednesday (09/March), Westpac Banking Corp released the results of its Australian consumer confidence survey for the period March 2022 which fell 4.2 percent from 100.8 to 96.6. This marks the worst decline since September 2020, and reflects pessimism rather than optimism as the index is below the 100 level.

A survey conducted by Westpac revealed that much of Australia's consumer response was being focused on the catastrophic floods that hit southeast Queensland and northern New South Wales. This flood disaster directly suppresses consumer confidence in the affected areas. Not half-hearted, consumer confidence in Brisbane fell 11.2 percent, a contrast compared to Melbourne which only fell 3.4 percent because it was not affected by flooding.

Interestingly, consumer confidence in rural areas was recorded to be stronger than urban areas. This was caused by commodity prices that continued to rise on international markets, thereby supporting the optimism of consumers in the agricultural sector.

In a further breakdown, the family finances sub-index fell by 3.9 percent from 86.8 to 83.3. The family's financial outlook for the next 12 months also weakened 0.4 percent from 106.4 to 106.0. Meanwhile, the sub-index of economic conditions for the next 12 months fell 6.7 percent from 97.1 to 90.6. The economic conditions sub-index for the next 5 years also slumped 5.6 percent from 105.2 to 99.3.

AUD/USD Trying to Revive

Broadly speaking, this morning's consumer confidence data did not have a high impact on the movement of the Australian Dollar versus the US Dollar. The AUD/USD pair is moving around 0.7274, strengthening 0.13 percent from the daily open level. Prices are trying to recover after suffering two days of sharp declines. Investor focus will then be on US core inflation data which will be released on Thursday before the announcement of the Fed's interest rate next week.