Australian confidence levels have taken different turns, with consumer sentiment slipping but business optimism improving, as markets digest the Reserve Bank’s recent policy moves and shifting inflation expectations.
The ANZ-Roy Morgan Consumer Confidence index dropped 1.2 points to 85.1 after the Reserve Bank held the cash rate steady at 3.6% last week. Despite the decline, confidence remains slightly higher than a year ago but below the 2025 average of 86.8.
State results were mixed, with declines in Victoria, Queensland, and Western Australia, offset by small gains in New South Wales and South Australia. Across all components, households reported lower confidence in their finances and buying intentions.
Just 20% of Australians said their families are better off than a year ago, while 41% said they are worse off. Looking ahead, 26% expect to be better off next year, and 31% expect to be worse off.
ANZ Economist Sophia Angala (pictured left) said the RBA’s commentary contributed to the dip in sentiment.
“The RBA board held the cash rate at 3.6% last week, with the post-meeting commentary a little more hawkish than we expected,” Angala said. “This was likely a factor in the week’s 1.2pt fall in ANZ-Roy Morgan Australian Consumer Confidence.”
She added that inflation expectations remain elevated.
“We now expect a 0.9% q/q increase in trimmed mean (underlying) inflation in Q3, which suggests the RBA will hold the cash rate for the remainder of the year,” Angala said. “We now expect the RBA to cut the cash rate by 25bp in February 2026.”
In contrast, Roy Morgan Business Confidence rose three points to 101.6 in September, following the RBA’s August rate cut and record ASX performance above 9,000 points.
The rise was driven by more firms saying they are “better off” financially and fewer viewing it as a “bad time to invest.” In September, 33.4% of businesses said they are better off than a year ago – the highest figure this year – while 39.3% said it’s a good time to invest, and only 29.5% said it’s a bad time.
Roy Morgan CEO Michele Levine (pictured right) said sentiment strengthened as businesses gained confidence in growth prospects.
“Roy Morgan Business Confidence increased 3pts to 101.6 in September as businesses grew more confident that the next year is a ‘good time to invest’ in growing the business and more businesses say they are ‘better off’ financially than this time a year ago,” Levine said.
Western Australia remained the most optimistic state, with confidence climbing 13.9pts to 117.2, followed by Tasmania at 109 after political stability returned following a leadership change. Confidence was also positive in South Australia (104.7), NSW (104.6) and Queensland (102.7), but Victoria remained below the neutral level at 91.5.
The most confident industries were mining (129.8), accommodation and food services (122.8) and administration and support services (120.4), while wholesale trade (74) and agriculture, forestry and fishing (76.8) lagged well behind.
Levine noted that despite the gains, inflation remains a watchpoint.
“Since the interest rate cut in mid-August, hopes for additional cuts have been tempered by a re-acceleration in official inflation,” she said.
For brokers, the mixed data highlights a cautious household sector but improving business outlook – signalling steady demand for refinancing amid subdued consumer spending and renewed confidence among SMEs benefiting from lower rates.
Get the hottest and freshest mortgage news delivered right into your inbox. Subscribe now to our FREE daily newsletter.
