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Australian consumer confidence tumbles to 2-year low
[SYDNEY] A measure of Australian consumer confidence collapsed in July to a two-year low despite two cuts in interest rates by the country's central bank, tax rebates and a modicum of stability in falling house prices.
Wednesday's survey showed the Melbourne Institute and Westpac Bank index of consumer sentiment slumped 4.1 per cent in July following a 0.6 per cent fall in June.
The index was down sharply by 9 per cent from a year earlier at 96.5, meaning pessimists just outnumbered optimists.
The survey of 1,200 people was conducted as the Reserve Bank of Australia (RBA) cut interest rates for a second straight month in July to a record low of 1 per cent, and left the door open to further easing, if needed.
In another positive news for consumers, Australian lawmakers last week approved A$158 billion (S$150 billion) worth of tax cuts over the next decade, which will offer a US$1,080 rebate to low-and middle-income earners.
"The fall in sentiment this month is troubling as it comes against what should have been a supportive backdrop for confidence," said Westpac senior economist Matthew Hassan.
"The main driver continues to be deepening concerns about the outlook for the Australian economy and prospects for family finances," Mr Hassan added.
"Deteriorating expectations for the economy outweighed any near term support from the prospect of lower interest rates and tax relief."
As a result, the survey's measure of economic conditions for the next 12 months slid 12.3 per cent, while family finances compared to a year ago fell 3.0 per cent.
There was hardly any optimism on the future, with the economic outlook for the next five years paring back sharply to fall 6.7 per cent and family finances over the year ahead down 8 per cent.
The impact of the rate cut failed to perk up respondents who held a mortgage where confidence fell 3.3 per cent.
A measure of whether it was a good time to buy a major household item climbed 3.6 per cent - the only sub-index to show a rise.
Still, the mood overall on housing picked up with the index of whether it was a good time to buy rising 5.4 per cent after a 1.8 per cent gain last month.