By Lucy Hughes Jones
(Australian Associated Press)
Consumers have been spooked by global financial turmoil, and business managers could soon also get the shakes.
Consumer confidence sagged in July to its lowest point in seven months, dragged down by disturbing financial headlines from Greece and China.
The Westpac/Melbourne Institute index out Wednesday showed consumer sentiment fell by 3.2 per cent in July, after dropping nearly seven per cent in June.
“The concerns around Greece have been complemented by sensational coverage of the collapse in the Chinese share market,” Westpac chief economist Bill Evans said.
And although business confidence jumped to a near two-year high in June, it is likely to be dented by China’s financial troubles, too.
National Australia Bank’s confidence barometer rose two points in June to 10 points – its highest level since September 2013.
But the survey was conducted before the culmination of Greece’s debt crisis, and the recent volatility on China’s mainland equity market.
“Growing jitters on global matters, especially in regards to China, suggests that current levels may be hard to sustain,” NAB economist James Glenn said.
All industries outside of mining showed signs of optimism due to low interest rates, a falling Australian dollar and the federal government’s business-friendly budget, he said.
Australian Chamber of Commerce and Industry chief executive Kate Carnell said the mining sector is taking a battering, with a confidence rating of zero.
“That’s not a big surprise when you look at the volatility in commodity prices and the slowdown in China,” she said.
Growth in China’s economy, the world’s second biggest, held steady at seven per cent in the second quarter, despite weakening retail sales and investment.
The figure was slightly above forecasts but tied the previous quarter for the lowest growth rate since early 2009 in the aftermath of the global financial crisis.
Australian Retailers Association executive director Russell Zimmerman said he was concerned consumer confidence would continue to be impacted by negative news-flows.
“It’s very, very worrying for the industry to see confidence figures heading in a southerly direction,” he said.
The Westpac/Melbourne Institute survey’s outlook for the economy over the next year fell 10.5 per cent, which was more than it had risen during the previous two months.