Consumer confidence remains near recessionary levels, with consumers surveyed by Westpac after the rate rise decision on June 6 noticeably more pessimistic than those surveyed the day prior.

Consumer sentiment has never been this low for this long, which points to difficult times ahead for the retail sector in Australia. Already, the household goods sector is being severely impacted, with trade in this sector down almost 5% in the year to April 2023, despite record inflation over that time period.

Business sentiment is now starting to go the way of consumer confidence, although the drop in sentiment, it must be said, is a far slower process. Business confidence now sits at -4 index points, and business conditions fell from +15 to +8 index points between April and May. More concerning is that labour and input costs edged up, a further sign that inflation is too sticky.

The fall in confidence levels amongst the business community reflects the increasing risk levels our Business Risk Index data is showing us. The number of credit enquiries businesses are making are 2.5 times what they were in April 2022, indicating that businesses are doing more frequent credit checks as insolvency rates increase, particularly in the construction and food and beverage sectors.

Court actions are also up 50% year on year, a further sign that a larger proportion of businesses are headed towards insolvency over the next six months, particularly as trading conditions will only get more difficult.