Consumer Sentiment Depressed, More Nervous On Jobs

Westpac consumer sentiment rose 0.2% m/m in June to hold steady at the depressed level of 79.2. It remains close to the March trough of 78.5. The further rate hike in June weighed on confidence post the decision but the minimum wage announcement helped to prevent it from falling on the month. The survey was done between June 5 and 9 and included RBA Lowe’s speech the day after the meeting (see MNI: Lowe: Persistent Services Inflation "Here", Tightening Not Done).

• Sentiment before the June 6 RBA meeting had risen to 89 from 79 due to the minimum wage announcement but then sank to 72.6 after the rate hike. With only a third of households holding a mortgage, the main concern is elevated inflation rather than rates. Inflation had a 62% recall amongst those surveyed and rates 27.6%, and news was considered negative.78% after the June meeting expected rates to rise in the next year up from 74% in May. Westpac expects another 25bp in July.
• Westpac noted that confidence sustained at these low levels hasn’t been seen since the late 1980s/ early 1990s recession. The outlook for the next year remained weak with “family finances next 12 months” falling 2.1% m/m and “economic outlook” almost unchanged after both falling sharply in May. “Time to buy a major household item” fell 6.5%.
• Consumers have become less confident regarding the labour market with unemployment expectations rising 6.6% m/m and 31.8% higher than its September 2022 trough.
• House price expectations were not impacted by the June 6 rate hike and rose 1.7% m/m to be well above the historical average. Rising house prices are worrying the RBA. But “time to buy a dwelling” fell 5.7% m/m due to higher prices and rising rates – this series has been weak since March 2022.

Source: MNI - Market News/Refinitiv/ABS