Westpac’s Consumer Sentiment survey is, along with the NAB Business survey, one of the must-watch data releases of each month.
But while the headline fall of 4.6% in September garnered most of the headlines, it is the deep dive into consumer psyches that the survey affords which is the real strength of this report.
In its excellent monthly summary, The Redbook, Westpac looks at each of the questions in the survey in more depth.
This month, two things jump out as being of concern for the consumer sector going forward and for the economy as a whole. Expectations about the future state of household finance have collapsed and consumers are worried about their jobs and employment once again.
The collapse in consumers’ expectations on the 5-year outlook – down 9.2% in September – was a big surprise and Westpac said they thought it likely captured, “concerns including: the end of the mining boom; a subdued global growth outlook, including for China (note that the last low read 16 years ago was during the Asian crisis); and structural issues such as high household debt and the high AUD.”
On the increase in the unemployment expectations index, which rose from 151.4 to 154.6 (higher is not good), Westpac said that “even if labour market conditions are on the mend, negative consumer perceptions around jobs can still be a major inhibiting factor for demand. The weakness in ‘cyclical’ spending evident in the Q2 national accounts may well extend into the second half of the year.”
It all adds up to a slowdown in the economic transition and perhaps a slowdown in Australian growth.