Australia: Consumer Sentiment fell 1.8% to 96.2 in June – Westpac

Australia’s Westpac Melbourne Institute Index of Consumer Sentiment fell 1.8% to 96.2 in June from 98.0 in May, notes Matthew Hassan, Senior Economist at Westpac.

Key Quotes

“The index is now back in firmly pessimistic territory with the June reading the weakest since the RBA’s 2016 rate cuts. Although confidence is not overly weak it has shown a clear downtrend since mid-2016.”

“Confidence around the wider economy fell sharply in June, the ‘economic conditions, next 12 months’ sub-index down 4.8% and the ‘economic conditions, next 5 years’ subindex down 8.3%.”

“The disappointing March quarter GDP update clearly had a hand in the weak result. Ahead of the release, many commentators feared the economy may have contracted in the quarter. While the final result showed a 0.3% gain, this was soft by historical standards with annual growth easing to 1.7%, the weakest pace since the GFC.”

“The Reserve Bank Board next meets on July 4. Policy is firmly on hold as the Bank assesses developments in housing and labour markets. This survey shows conditions remain lacklustre across the consumer sector, suggesting demand will remain sluggish near term. For policymakers, the main risks still surround the potential feedback from weak household spending to employment and investment. For now, the picture around labour market conditions still looks more encouraging. We continue to expect the Bank to leave rates unchanged over the rest of 2017 and throughout 2018.”