Australian consumer confidence fell sharply last week, driven by global economic unease following US President Donald Trump’s announcement of new global tariffs.
Meanwhile, fresh labour market figures from the ABS and Roy Morgan revealed contrasting narratives, underscoring both job gains and persistent underutilisation in the workforce.
The ANZ-Roy Morgan Consumer Confidence Index dropped 2.6 points to 84.2 in early April, with the biggest declines seen in short- and medium-term economic expectations and household finances.
“The drop likely reflects the more pessimistic global backdrop following US tariff announcements (the previous week’s survey was taken partly before and partly after the initial announcement),” said ANZ economist Sophia Angala (pictured left).
“Consumer confidence fell most sharply in subindices that describe the year ahead. Both financial and economic confidence fell below their respective H2 2024 averages.”
The fall in confidence came as the ASX200 dipped by around 20 points, and the Australian dollar dropped by 1 cent against the US dollar—although both had experienced sharper falls earlier in the week.
Despite the gloomy outlook, buying sentiment remained relatively stable, with 22% saying it was a good time to buy major household items (up 2ppts), and 40% saying it was a bad time (up 1ppt).
In a recent speech, RBA governor Michele Bullock addressed the growing uncertainty.
“The RBA is focusing on how global uncertainty could impact household and business decisions domestically,” Bullock said.
Markets are widely expecting the RBA to cut the cash rate by 25 basis points in May, July, and August, in a bid to stimulate domestic demand and counter international headwinds.
According to the Australian Bureau of Statistics, unemployment rose slightly to 4.1% in March, despite the creation of 32,000 new jobs.
“With employment increasing by 32,000 people and the number of unemployed increasing by 3,000 people, the unemployment rate rose slightly to 4.1 per cent for March,” said Sean Crick, ABS head of labour statistics.
Employment has grown by 308,000 people (2.2%) over the past 12 months, slightly above the long-term pre-COVID average of 2%.
The participation rate edged up to 66.8%, and the employment-to-population ratio held steady at 64.1%. However, monthly hours worked declined by 0.3%, with severe weather events cited as a key factor.
“A higher-than-usual number of people reported working reduced hours this month due to bad weather, coinciding with ex-Tropical Cyclone Alfred and other major weather events in New South Wales and Queensland,” Crick said.
In contrast, Roy Morgan’s employment data painted a more sobering picture.
The organisation’s real unemployment rate fell to 10.2% in March, down from 11.5% in February, with 1.6 million Australians still looking for work.
“The latest Roy Morgan employment estimates for March show total Australian unemployment or under-employment down a significant 429,000 to 3,033,000 (19.3% of the workforce, down 2.4%).” said Roy Morgan CEO Michele Levine (pictured right).
“The decrease was driven by 167,000 people leaving the workforce and an increase in jobs, up 63,000 to 14,186,000. The increase in employment was broad-based with full-time employment increasing 29,000 to 9,385,000 and part-time employment increasing 34,000 to 4,801,000.”
The report also revealed that the labour force shrank by 167,000 people, many of whom stopped actively seeking work.
Roy Morgan noted that while total employment grew, underemployment remained a key issue, with 1.43 million Australians working fewer hours than desired.
Combined unemployment and underemployment stood at 19.3% in March, still significantly higher than the ABS’s combined figure of around 10%.
“Despite the record employment growth over the last three years, there are still a significant number of people who have joined the workforce without finding employment – a total of 435,000 since the last federal election,” Levine said.
“These figures show that as we head towards a federal election the economy continues to deal with millions of Australians looking for work (unemployed) or looking for more work (under-employed).”
As Australia moves closer to a federal election in May, both consumer confidence and labour market figures will be under scrutiny.
Although job creation remains strong, labour underutilisation, global instability, and falling consumer sentiment highlight the fragility of the current economic environment.
“Looking back since the last federal election, the rapidly increasing Australian population and workforce has led to a persistently high level of labour under-utilisation… averaging nearly 3 million over the last two years,” Levine said.
See the Roy Morgan report and the unemployment statistics from ABS and Roy Morgan.
