Finances, housing take consumer confidence lower
CONSUMER sentiment has fallen for the seventh consecutive month, marking the weakest succession of reads since 2008’s global financial crisis.
The latest WestpacMelbourne Institute Index of consumer sentiment fell 1.2 per cent in August to 95.5, from 96.6 in July.
Westpac chief economist Bill Evans said increased family finance pressures, concerns about interests rates and housing affordability in NSW and Victoria had outweighed a boost in jobs confidence.
“The further weakening in consumer sentiment comes despite some positives leading into this month’s survey,” Mr Evans said, noting the Reserve Bank’s leaving interest rates unchanged, a continued improvement in labour market conditions and a booming Australia dollar.
Views on current finances compared with a year ago fell 5.1 per cent to 78.1 — the lowest level since June 2014 when consumers reacted to the Abbott government’s first budget.
“Much of the weakness is likely to reflect a mix of weak growth in wages, increases in key costs, such as electricity, and emerging concerns about rising interest rates,” he said.
He said weak sentiment around current finances appear to have affected consumer attitude towards major purchases.
The index on whether consumers thought now was a good time to buy a major household item index fell 4.9 per cent, unwinding most of the 6 per cent improvement seen over June-July.
“Notably, the pullback has come despite increasingly aggressive price discounting and a likely further improvement in purchasing power from a higher Australian dollar,” Mr Evans said.
Consumer expectations were more upbeat, particularly around jobs, he said.
Unemployment expectations fell 2.6 per cent, the lowest level since November 2011.
Sentiment around finances over the next year were up 2.1 per cent, while confidence rose 2.3 per cent around economic conditions in the next five years, after a sharp drop over the previous two months.
Meanwhile, house buying sentiment fell in Sydney and Melbourne.