Australian consumer confidence fell this month as volatility on global stock markets rattled Aussie households.
The Westpac-Melbourne Institute monthly survey of consumer sentiment showed a 2.3% to decline to 102.7 — down from January’s four-year high of 105.1.
Despite the fall, the index stayed above a reading of 100 for the third straight month. A reading of 100 is deemed neutral, so any result above 100 means that optimists outnumber pessimists.
“The survey was conducted over the week of February 5 – February 11. That week was marked by a wave of volatility in global share markets,” said Westpac chief economist Bill Evans.
“Extensive media coverage of these developments would have unnerved respondents on two fronts – the impact on their own financial position and concerns for general global stability.”
“These concerns appear to have been acutely felt by retirees whose confidence fell by 13.5%.”
Evans said the declines in the major sub-indexes could all broadly be attributed to concerns around increased market volatility.
In particular, views towards family finances declined sharply from the previous month while views toward the broader economy also fell.
Taking a step back from the monthly fluctuations, results over the last three months in the Westpac-MI survey indicate that Australian households are slowly beginning to feel more optimistic.
That also ties in with the broader trend revealed by ANZ’s weekly consumer confidence reading.
It follows a 12-month period where pessimists outnumbered optimists in the Westpac survey for all but one month, as Australian consumers struggle under the combination of high household debt and low wage growth.
“Having said that, the level of the Index is still well below levels typically associated with a robust consumer,” Evans added.
Evans said the recent rise in confidence was partly due to declining expectations among Australian consumers for further interest rate rises by the RBA — a view reinforced by the bank’s subdued inflation outlook in last week’s quarterly Statement on Monetary Policy.
On the subject of housing, the “time to buy a dwelling index” is higher than it was 12 months ago, with a reading of 103.8 compared to 95.7 in February 2017. However, it remains well below the long-run average of 120.
But future house price expectations rose from last month’s lows, in the wake of the latest price falls in most major housing markets.
“The Westpac Melbourne Institute Index of House Price Expectations rose 4.8% to 135.3, reversing all of last month’s decline to be back comfortably above its long run average,” Evans said.
“The biggest gain in February was in NSW although price expectations in the state are coming from a weaker starting point and still show the biggest pull back on this time last year.”
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