Australian consumer sentiment slips in August amid economic angst
AUSTRALIAN consumer sentiment slipped in August as a decision by the country’s central bank not to hike interest rates for a second month did little to soothe worries about the economic outlook.
The Westpac-Melbourne Institute index of consumer sentiment dipped 0.4 per cent in August from July, when it bounced 2.7 per cent. The index reading of 81.0 showed pessimists again outnumbered optimists, a level that used to be only associated with recessions.
A slowdown in consumer spending is one reason the Reserve Bank Australia (RBA) held rates steady at 4.1 per cent last week, though it cautioned that it might yet have to hike further to bring inflation to heel.
“The survey detail pointed to little or no impact from the RBA’s decision to pause,” noted Westpac senior economist Matthew Hassan. “Responses showed no improvement over the course of survey week, sentiment instead declining 4.9 per cent between those surveyed prior to the RBA decision and those surveyed after.”
Two thirds of respondents still expected rates to rise over the year ahead, pushing sentiment among mortgage holders down a sharp 7.2 per cent.
The survey’s measure of economic conditions over the next 12 months dropped 4.0 per cent, while the outlook for the next five years dipped 0.8 per cent.
The mood was a little brighter on family finances, which rose 3.4 per cent, while a measure of whether it was a good time to buy a major household item edged up 0.3 per cent.
Consumers were much more downbeat on whether it was a good time to buy a house, but also bullish on prices as that index hit its highest for the year so far. REUTERS
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