Consumers Reassured By Lower RBA Hike

Westpac consumer confidence for October fell 0.9% m/m to 83.7, which is still higher than the recent trough in August of 81.2. With rates expected to rise further and petrol prices higher, a pullback in consumer sentiment was highly likely.

• Westpac says that the smaller-than-expected rate rise on October 4 helped to avert a larger fall in confidence. Sentiment among those surveyed after the RBA meeting (88.7) was up 14.7% compared with those pre-meeting (77.4). The survey was conducted between October 3 and 6.
• Westpac doesn’t expect this RBA “relief rebound” to persist over the coming months.
• Despite the setback in October, it still looks like consumer confidence is forming a tentative trough but at levels consistent with a crisis. However, survey details were not as bad as the headline would suggest, with “family finances vs a year ago” jumping 18.8% for example.
• Westpac warned not to read too much into the increase in unemployment expectations as they were coming from near-record lows and it is too early to call this a trend.
• The very negative sentiment is being driven by the cost of living, rising rates and concerns regarding the near-term economic outlook.

Source: MNI - Market News, Westpac, CBA