Australia consumer sentiment languishes in pessimistic territory
AUSTRALIA’S consumer confidence slipped further into “deeply pessimistic” territory as rising petrol, rent and electricity prices squeeze already heavily burdened households.
Sentiment slipped 1.5 per cent to 79.7 points, meaning pessimists heavily outweighed optimists given a reading of 100 is the dividing line, a Westpac Banking survey showed on Tuesday (Sep 12). The index has held in a 78-86 range for the past year.
“Since the survey began in 1974, the only comparable period of such sustained weakness was during the recession of the early 1990s,” said Bill Evans, chief economist at Westpac. “Persistent pessimism has continued despite easing fears of further interest rate rises.”
The poll was conducted Sep 4-8, spanning the Reserve Bank of Australia’s (RBA) Sep 5 meeting when it left the cash rate unchanged at 4.1 per cent for a third straight month.
The RBA is currently in watch-and-wait mode after four percentage points of rate hikes since May last year as it tries to get control over inflation. While consumer prices have begun to abate, a tight labour market and strengthening wage growth mean policymakers are ready to move again if needed.
Assessments of “family finances compared to a year ago” slumped 4.4 per cent to the lowest level in the current cycle, Evans said. The “family finances next 12 months” sub-index rose 1.8 per cent, while remaining in pessimistic territory.
A gauge of the outlook for household spending, “the time to buy a major household item” sub-index fell 3 per cent to 76.6.
“This component is particularly troubling because, unlike the overall index and the other components, it is tracking well below the levels seen in the recession of the early 1990s,” Evans said. The average during that period was a “much milder” 91, he added.
The report showed the “time to buy a dwelling” index edged up 0.6 per cent and at 72.5 points remains in pessimistic territory. That comes amid a strong rebound in housing prices across Australia since the start of the year.
The “House Price Expectations Index” climbed a further 2.2 per cent to 154.6, a new cycle high, Westpac said. BLOOMBERG
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