The confusing run of data in Australia continues with the release of the Westpac- Melbourne Institutes November monthly consumer sentiment survey showing a rise 1.9% in November to a still below average 96.6.
Bill Evans, Westpac’s Chief Economist, was unimpressed by the result:
This is an unsurprising but still disappointing result. The Index is 12.5% below its level of a year ago and 3.6% below its level before the lead up period to the Commonwealth budget in May. In fact, we have now seen nine consecutive months where pessimists have outnumbered optimists. That is the longest run of pessimists outnumbering optimists since the Global Financial Crisis and before that the recession of the early 1990’s.
It is a disappointing result in the context of the higher than average ANZ consumer confidence data we have seen recently, and the big bounce in the NAB Business Survey which was released yesterday. Evans says that the “Christmas selling season” may be weaker than many hoped.
There is further disturbing news on prospects for the Christmas season. Since 2007 we have asked the following question in November. “Do you think that you will spend less, about the same, or more on Christmas gifts compared to last year?” For this year 38% registered “less”; 50 %, “same” and 12% “more”. The net balance (more minus less) of minus 26% is the worst since 2008 (minus 34%) which was in direct response to the Global Financial Crisis
That’s an appalling read on what was starting to look like it might be a positive Christmas as spending caught up with confidence after a post-budget drought.
And look at Myer today. Its shares are down as much as 3% after sales for the three months to October came in flat, disappointing the market. CEO Bernie Brookes is banking on Christmas being a success, saying “the business is well positioned to make the most of the busiest time of the year during Christmas and the Stocktake sale”.
He might be worried looking at this data.
What today’s piece of information in this increasingly complex puzzle that is the Australian economy does is further cloud the outlook and reinforce the uncertainty in the economy.
But if the NAB survey results yesterday was not an aberration then the road to recovery is being paved.
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