Australia: Positive lift in the consumer mood lost its way - Westpac

Four months in and the positive lift in the Australian consumer mood at the start of the year looks to have lost its way and while the decline in Westpac–Melbourne Institute Consumer Sentiment Index since January has been small, and confidence remains in positive territory overall, it is disappointing nonetheless, explains the research team at Westpac.

Key Quotes

“The rally needed to sustain and extend from January’s 105.1 into the 110+ range to mark a clear break from the ‘persistent weakness’ that has dogged the Australian consumer in recent years.”

“Instead, confidence has again succumbed, weighed down by a sharemarket sell-off and renewed concerns about the economic and financial outlook – global trade tensions and declining house prices in the mix.”

“To repeat, most of the index moves since January have been small – it’s not that confidence has collapsed, it’s just that it has not followed through in the way we hoped three months ago.”

“For the RBA, the softening in sentiment takes much of the gloss off some better than expected official figures on consumer spending and household incomes. Without a further lift in consumption growth, it’s February forecast for a lift in growth to 3¼% this year will be difficult to achieve.”

“While the global mood has improved markedly over the last year, Australia sits with a small group of countries that have not seen sentiment move into robust positive territory.”