‘People are spooked’: Australia’s January consumer confidence sinks to three-decade low over Omicron

Australia's consumer sentiment dived this month as worries about the explosion in Omicron Covid cases sent confidence to its lowest January level since 1992, according to the latest ANZ-Roy Morgan survey.

Consumer confidence fell 7.6% last week, sinking to its lowest rate since October 2020. Omicron case numbers surged across Australia, straining testing facilities and disrupting everything from supply chains to hairdressing salons.

All states fell below the neutral confidence level of 100, and were below the depths of the Delta Covid variant wave. All subindices were also in retreat, including current financial conditions dropping 11.3%. The number of respondents saying now was "the time to buy a major household item" also falling by a similar 11.4%.

While the reading for "future financial conditions" was down a relatively modest 4.3%, the proportion of those expecting to be worse off in a year's time rose to 19%, the most since September 2020.

Head of Australian economics at ANZ, David Plank, said "people are spooked by Omicron - obviously, case numbers, deaths unfortunately - and the difficulty of getting tested. All of that has made people apprehensive and nervous."

The low confidence reading, at 97.9, was also notable because it came in January, a time of the year typically associated with upbeat sentiment. Back in January 1992, the last time it was this low in the first month of the year, unemployment was at about 10% and rising towards 11%, Plank said.

"What really matters is the labour market conditions were very, very different [from now]," he said. Australia's November jobless rate was 4.6%, with the ABS scheduled to provide December figures this Thursday.