― The Westpac–Melbourne Institute Index of Consumer Sentiment edged up 0.3% in Apr from 99.5 in Mar to 99.7. The essentially fl at result leaves sentiment fi rmly around ‘neutral’.
― The flat result was a little disappointing given last month’s reading was clearly impacted by high profi le lay-off announcements. Positive news on jobs and housing could also have been expected to give a lift. Policy infl uences in the month are likely to have been minimal.
― The survey detail showed that improved assessments of family fi nances and the near term economic outlook were mostly off set by downgrades to expectations for the economic outlook over the next 5yrs and assessments of whether now is ‘a good time to buy a major household item’.
― Our CSI± measure, our modifi ed sentiment indicator that we favour as a guide to actual spending, declined 0.9% in Apr to be down 7% from its Nov peak. Although it remains consistent with modest growth in per capita spending, CSI± points to a likely loss of momentum in Q2.
― The sub-index on ‘time to buy a major item’ fell 8.7% in Apr, dropping below average for the fi rst time since Aug. Although it is diffi cult to know, the fall may refl ect consumers starting to register the price impact of the declining AUD over the last year. The high AUD had previously appeared to be a significant support to buyer attitudes.
― The index tracking views on ‘time to buy a dwelling’ fell further in Apr and is now pointing to a clear cyclical slowdown. At 115.9, the index is nearly 30pts below its Sep peak and well below its long run average. The reading is consistent with turnover growth fl attening out by mid-year. The detail shows marked divergences across capital cities and non-metro areas.
― Consumers remain positive on the outlook for house prices with the Westpac Melbourne Institute House Price Expectations Index rising 2.3% to 158.6. While that remains near recent highs, the detailed responses show fewer consumers expect prices to rise by over 10% in the year ahead.
― The Westpac Melbourne Institute Unemployment Expectations Index fell 3.2% in Apr, reversing only part of last month’s 5.5% jump and leaving the Index at a relatively high level by historical standards (the second highest since the GFC). Recall that higher reads mean more consumers expect unemployment to rise in the year ahead.
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
