Australian consumers have become more cautious as fears about China's growth prospects and the country's battered stocks reverberate through global financial markets.
The ANZ-Roy Morgan consumer confidence index fell 1.9 per cent in the week ending January 10, more than retracing the 0.8 per cent gain recorded at the start of 2016.
The drop coincided with turmoil on global equity markets, which were shaken by fears about China's economy and government moves to ease steep falls on its share markets.
Australian consumers reacted by becoming worried about their personal finances, ANZ chief economist Warren Hogan said.
The ANZ-Roy Morgan survey's sub-index on personal finances dropped almost 10 per cent, the largest fall since March 2012.
Consumers' views about their future financial position also deteriorated. The sub-index has fallen 5.8 per cent over the past three weeks and is now below its long-run average.
"(But) overall consumer confidence remains above its long-run average and well above the levels seen for much of the last two years," Mr Hogan said.
CommSec's chief economist Craig James said people had become more circumspect as the Australian dollar has also plummeted in response to China's woes.
"Consumers feel worse off. It means they may have to take more of their holidays from home, or look at buying locally rather than buying overseas," he said.
"Clearly, consumers have become more alert, but we really can't say they've become alarmed," he said.
Mr James noted that the survey also found that the number of consumers who felt now was a good time to buy a major household item had only dropped slightly in the week and remained well above the long-term average.
ANZ's Mr Hogan said recent equities volatility will need to persist before translating into a meaningful drop in confidence that could impact discretionary spending and investment.
"Indeed, despite current concerns, conditions in the domestic economy are robust," he said.
This week's ANZ job ads survey showed that the number of jobs ads grew by 10 per cent in 2015, and that growth will continue into 2016.
A healthy labour market should be a positive factor for consumer confidence, with ANZ tipping the jobless rate to hold below six per cent in the months ahead.
"Although we see headwinds building later in 2016," Mr Hogan said.
