AUSTRALIA DATA: Mixed Westpac Consumer Sentiment Report, Q4 Higher

Westpac’s consumer confidence fell 2% to 92.8 in December, driven by forward-looking components, after rising 5.3%. Through the volatility the Q4 average is up 9.9% q/q. While Q3 consumption was soft, monthly data this quarter have strengthened and the current conditions in the Westpac survey rose solidly, which suggests that there could be a possible improvement. The RBA continues to expect the economy to recover. Westpac is forecasting the first rate cut in May.

• Confidence on the economic outlook weakened in December as Q3 GDP, reported at the start of the month, grew only 0.8% y/y. Uncertainty over the global and rates outlook probably also weighed, according to Westpac.
• After falling for the last two months, unemployment expectations rose 2.7% in December but they remain below the series average in line with the low unemployment rate.
• Responses to news topics were less unfavourable than in September. Reports on inflation remained the most recalled and there was only a slight improvement in respondents’ assessment of them. There were “more material improvements” on news related to rates, the economy, employment and budget & taxation. Year-ahead mortgage rate expectations ticked up but are around “historical lows”.
• The assessment of “family finances vs a year ago” rose 6.9% m/m, the sixth straight improvement, helped by unchanged rates, tax cuts, lower inflation and cost-of-living relief. The outlook a year ahead remains above the breakeven 100-mark.
• The “time to buy a major household item” rose 4.8% to 89.2, the seventh consecutive rise and highest since June 2022. While improving, it remains below its historical average.
• Both housing sentiment and house price expectations deteriorated this month with “time to buy a dwelling” down 6% and prices down 5.3%.

Australia Westpac consumer confidence