Australian consumer confidence softened in November, according to research released by Westpac Bank on Wednesday.
The group’s monthly consumer sentiment index, produced in conjunction with the Melbourne Institute, fell 1.1% to 101.3, the first decline seen since July.
It also left the index at the lowest level since August.
Sitting just above 100, it indicates that there were optimists than pessimists among those surveyed, albeit fractionally.
While nothing to fret over, the internal movements within the survey were slightly disappointing, particularly on the outlook for household spending in the lead-up to Christmas.
“Four of the five components of the Index fell slightly in the month,” said Bill Evans, chief economist at Westpac.
“Both measures of family finances were down a little. The sub-index tracking views on family finances compared to year ago fell by 1.3% while the sub-index tracking expectations for finances over the next 12 months fell by 0.8%.
“Economic conditions over the next 12 months’ increased by 0.6% but economic conditions over the next 5 years’ fell by 1.4%,” he added.
The final component within the survey — whether now was a good time to buy a major household item — also slid, falling 2.4%.
Evans said the result was slightly disappointing for the outlook for Christmas spending.
“In November we traditionally gauge respondents’ Christmas spending intentions,” said Evans.
“The question is ‘do you think that you will spend less, about the same, or more on Christmas gifts compared to last year?’
“Last year we recorded a net balance – the proportion expecting to spend more minus the proportion expecting to spend less – of minus 13%. This year the net balance has declined to minus 20.1%.
“That is a disappointing result given the promising improvement in spending plans in 2015.”
It also suggests that the rebound in retail sales seen over the past two months could prove to be fleeting.
Here’s the movements within the November survey by individual component, comparing the result over the month as well as a year earlier:
With sentiment levels continuing to track sideways, Evans suggests that the RBA will likely keep interest rates on hold over the course of next year.
“Westpac is expecting economic growth and employment growth to lift in 2017 boosted by higher commodity prices, ongoing strong residential construction and booming exports,” says Evans.
“While the pace of house price appreciation can be expected to slow the case for lower rates under those circumstances does not seem to be strong.
“We expect rates to remain on hold in 2017.”
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