Like the ANZ Weekly consumer sentiment released earlier today, the monthly Westpac-Melbourne Institute Consumer Sentiment survey showed that confidence has stabilised in the month after the budget with a rise from 92.9 in May to 93.2 in June.
Westpac notes that this is still 6.6% lower than April’s pre-budget levels and 15.6% below the euphoria which greeted the Abbott government after its election in September 2013.
Westpac says they are disappointed by the “absence of a significant bounce in sentiment” but has compared it with “more gradual recovery paths” in 1995, 2006 and 2010.
No further fall is good news for the economy but the level of consumer disappointment the 15.6% fall (since the election high) implies together with the fact Westpac highlights that the “unfavourable” reading for budget and taxation’s at 74% “is the highest level of recall for this topic since we began running the survey in the mid-1970s” means that confidence may take some time – and a better selling campaign from the Prime Minister and Treasurer – to recover.
The good news, however, is that consumers are becoming “slighthly less fearful of rising unemployment” with the index sub-component falling 1.1% to 156.5 which “is a significant improvement on the peak in unemployment fears back in March when the index hit 164.4.” Tellingly, though, it is way above the 144.7 trough last November.
There are many more sub-indices from this survey and we look forward to the release of the Westpac Redbook in a few days time which studies the report in great detail.
In the meantime there are conflicting signals which show that “family finances compared to a year ago” fell another 5.4% in June to a new low. But the positive responses to “whether now is a good time to buy a dwelling” rebounded 11.4%.
So, on face value, this consumer sentiment survey is disappointing insofar as it didn’t bounce.
But a protracted recovery seemed more likely based on the ANZ survey. On the other hand, less concern about unemployment and more positive responses to “time to buy a house” suggest that an underlying optimism remains.
So if business is true to the NAB survey yesterday and continues to hire and as these jobs come through into more Australians working and earning a living the slow grind back for consumer confidence will mean that while the domestic economy is likely to have a two to three month flat spot the recovery is in train.