Roy Morgan Update June 27, 2023: Unemployment Jumps, Consumer Confidence & Inflation Expectations

In this week's Market Research Update, we present the latest data on Real Unemployment, Consumer Confidence & Inflation Expectations.

Welcome to the Roy Morgan Weekly Update.

Today we’re looking at unemployment – “Real Unemployment”, inflation expectations and consumer confidence.

Real unemployment is up in June (up 1.9% points to 10.3%)

Inflation Expectations are up this week (up 0.4% points to 5.9%)

Consumer Confidence is up this week (up 2.5 points to 74.9) but still well below 80.

Support for the ALP is strong on a two-party preferred basis at 57% compared to the Coalition on 43%, but Government Confidence is down.

Support for the Government is typically strong when there’s international unrest, and the Fair Work Wage increase from July 1 also gives comfort against cost of living increases to those on awards.

The Fair Work Commission has announced the minimum wage will increase by 8.6% (impacting around 200,000 people) and minimum award wages will increase by 5.75% (impacting around 2.7 million workers) from July 1.

The increase in real unemployment in June, as well as the spike in inflation expectations means the Reserve Bank must think carefully before increasing interest rates again next month.

Last month (in May) we saw the indicators move positively – real unemployment was down to 8.4% and inflation expectations were down to 5.2%.

This came after the only break in the last 14 months when the RBA did not increase interest rates in April – so there were no bank increases coming through in May.

Inflation Expectations increased 0.4% points to 5.9% this week and are now at their highest for over three months since mid-March.

Australians now expect annual inflation to be 5.9% over each of the next two years.

Inflation Expectations have now increased significantly since May when the measure averaged only 5.2% for the month.

The two-party preferred support for the Government is unchanged this week with the Albanese Government on 57% on a two-party preferred basis well ahead of the Coalition on 43%.

However, Government Confidence – whether people think the country is going in the right direction or the wrong direction – was down 3 points to 83.5.

Now 50.5% of Australians – say the country is ‘Heading in the Wrong Direction’ and 34% say it’s ‘Heading in the Right Direction’.

Consumers continue to struggle and ANZ-Roy Morgan Consumer Confidence was up 2.5 points to 74.9 – the first increase since mid-May.

This is also the largest increase in the weekly index since the first week of January.

However, Consumer Confidence has now spent 17 weeks below 80 and three weeks below the mark of 75 – the longest period at this level since the early days of the pandemic in 2020.

Consumer Confidence by housing status showed some divergence this week with the metric diving for People Paying Off Their Homes, down 1.5 points to 68.5, but increasing for Home Owners (up by 5.3 points to 77.9) and Renters (up 2.3 points to 76.6).

All eyes of People Paying Off Their Homes will be on next week’s Reserve Bank board meeting and whether the RBA will increase interest rates for a 13^th time in just over a year.