Further hit to confidence
But optimism reported in housing, jobs outlook
AUSTRALIA’S devastating bushfires have caused consumer confidence to fall in January – another sign of an economy with lacklustre spending. The monthly Westpac-Melbourne Institute consumer sentiment index fell 1.8 per cent to 93.4 points, the fifth consecutive result below the 100-point neutral mark. Westpac chief economist Bill Evans said it was somewhat surprising the fall was not more dramatic, given the 5.8 per cent drop during the Queensland floods in 2011.
However, the index in 2020 had been substantially lower than in 2011, which reduced the drop, Mr Evans said.
The 93.4 point result is 6.2 per cent lower than 12 months ago.
“This low level of confidence is consistent with the generally lacklustre reports on consumer spending,” Mr Evans said.
All the economic components of the index recorded declines in the first month of 2020.
Confidence in economic conditions for the next 12 months and the next five years fell by 5.4 and 3.7 per cent respectively.
However, Australians were more optimistic about buying a home.
This index gained 5.7 per cent, which reversed the decline of 5.6 per cent recorded in December.
The result (118.8 points) is 3.4 per cent higher than a year ago, which the report authors said indicated buying conditions in the housing market were more favourable.
Survey respondents also reported slightly more confidence in family finances for the next 12 months.
This index was up 0.9 per cent at 99 points.
Unemployment expectations also improved.
There was a 2.9 per cent drop in respondents who expected higher unemployment.
However this index, and the family finances one, remained lower than 12 months ago.
The survey of 1200 adults was conducted last week.
The Reserve Bank board may take the results into account when it meets on February 4 to consider interest rates.