Consumer sentiment fell again in June The Westpac–Melbourne Institute Consumer Sentiment Index decreased for the third consecutive month, by 1.8 per cent in June following decreases of 1.1 per cent in May and of 0.7 per cent in April, indicating that consumers in Australia are becoming less optimistic. At 96.2, the Index is 5.8 per cent below its level a year ago.
The June survey shows that consumers are less optimistic about future economic conditions with the indexes relating to economic conditions next 12 months and next 5 years falling by 4.8 and 8.3 per cent, respectively. Despite being pessimistic about general economic conditions, consumers are more optimistic about future family finances with the index relating to family finances next 12 months rising by 3.1 per cent. On balance, the Expectations Index fell by 3.2 per cent in June. Meanwhile, the index relating to family finances last 12 months fell by 1.5 per cent while the index relating to good/bad time to buy major household items rose by 1.7 per cent. As a result, the Current Conditions Index fell by 0.4 per cent in June.
The results across demographic groups in Table 3 show decreases in most categories. The largest monthly increase in the Index of 13.2 per cent was reported for Labourer/Operator while the largest monthly decrease of 11.8 per cent was reported for those with household income between $60k-$80k.
The index relating to good/bad time to buy a dwelling rose by 1.0 per cent to 90.9 in June but its below-100 reading still indicates ‘unfavourable’ buying conditions. In year-ended terms, the index is 12.4 per cent below its level a year ago.
In June, the survey was conducted in the week when consumers heard about the RBA keeping the target cash rate unchanged at 1.5 per cent and news about real GDP growing by 0.3 per cent in the March quarter. ‘Economic conditions’, ‘Budget & Taxation’ and ‘Interest rates’ remain the top news recalled by consumers this quarter. All news heard indexes indicated that news remains predominantly unfavourable; in particular, the news heard indexes for ‘Economic conditions’, ‘Budget & Taxation’ and ‘Interest rates’ have dropped considerably from their March quarter readings, indicating that most consumers rated news in these categories considerably more ‘unfavourable’ now than three months ago.
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.
