Consumer confidence slumps
Now where is Malcolm hiding? We think he should be around to share the joy of a sour business environment mostly caused by recent lousy government. Funny how a major political event that created such euphoria for almost a year only generated a few bucks for poof marriage licences. The faecal touch in practice!
Australian consumer confidence has been hit hard by a combination of rising mortgage rates and political instability. The Westpac-Melbourne Institute consumer sentiment index tumbled three per cent in September.
However, the survey was still marginally optimistic, with the index at 103.6. A reading above 100 represents positive sentiment, with the higher the number the greater the optimism.
Consumer confidence slumps after taking hit from interest rates and political instability
It was the most downbeat reading since November last year.
“The detail suggests that confidence has been affected by increases in mortgage interest rates, political instability and household budget pressures,” Westpac chief economist Bill Evans said.
However, Mr Evans said it was likely there was a partial offset from the strong growth figures which were announced during the survey period last week.
The slide in consumer sentiment tracks a similar fall in business confidence over the same period.
Pressure on household finances mounting
The survey of 1,200 consumers was taken in the wake of the Liberal Party leadership spill and after three of the four big banks raised their standard variable mortgage rates.
There was added pressure from petrol prices hitting a five-and-a-half year high above $1.50 per litre and the ASX falling 2 per cent over the month.
While all components of the survey deteriorated in September, the largest fall was reported in the “Economic Outlook, next 5 years” sub-index which fell almost 6 per cent.
Views on family finances were also noticeably weaker, particularly in households with a mortgage.
Mr Evans said the impact of the leadership change was apparent in diverging sentiment responses across voter groups.
“Whereas those identifying as Coalition voters reported a 6.4 per cent fall, ALP voters recorded a 4 per cent rise. Those without a stated preference reported a 6.6 per cent drop in sentiment,” Mr Evans said.
Consumers are also adopting a decidedly risk-averse stance about their finances.
“Nearly 64 per cent of consumers still favour safe options — bank deposits, superannuation or paying down debt,” Mr Evans said.
“Only 12 per cent nominated real estate and 8 per cent nominated shares, the mix largely unchanged from June and March.