The Westpac Melbourne Institute Consumer sentiment has just been released and it has slipped back again losing 0.7% in March to 99.5.
This is another indicator that the rosiness that the Q4 GDP data last week and building approvals data recently has painted on the Austrlian economy might yet prove ephemeral.
Westpac Economist Matthew Hassan noted in the statement accompanying the data:
The Index has now fallen 10.9% from its November peak of 110.3 and is at its lowest level since May last year. The initial declines in December-January looked to be mainly the unwinding of the election-related sentiment boost. More recent falls though have had a very clear theme centring on a sharp loss of confidence in the economic outlook and escalating job-loss fears.
Hassan said that expectations about the economy now and in 12 months had collapsed and that concerns about job security were weighing heavily on consumers with the Index of Unemployment Expectations up 5.5% and sitting at 13.6% it is now above the November level. More striking though is the fact that the index is at 164.4, “an extreme high only eclipsed by readings during 2008-09 and the recessions in the early 1990s and early 1980s.”
This is a tough economy to read. Consumers are worried as this data shows, yet retail sales are up strongly over the past 6 months. It’s why the RBA has said a period of observation of economic outcomes and “stability” in interest rates is warranted.
But Westpac retains the view, like the NAB yesterday after the weak Business Survey, that rates will be falling again in the second half of 2014.