MNI 5 Things: Australia Sentiment Dn Despite Well-Recd Budget

--Westpac-MI Consumer Sentiment Above 100 for 6 Straight Months

By Sophia Rodrigues

     SYDNEY (MNI) - The following are the five key observations we made from the

Westpac-Melbourne Institute's consumer sentiment survey for May, published

Wednesday.

     --Consumer sentiment fell 0.6% m/m to 101.8, as a positive boost from

federal budget was offset by other factors. Such factors may include rise in

fuel prices, fall in the Australian dollar, and further fall in house prices.

The survey was taken during the period May 7 to 12 (federal budget was released

on May 8). The sentiment index based on responses collected pre-budget was 99.9

while post-budget index was firm at 104.8. The post-budget turnaround was most

positive since Westpac began tracking sub-samples in 2011.

     --The responses related to the budget was relatively well-received. Even

though the overall balance was still negative (-10%), it was much less negative

versus last year, and it was the best since Westpac began running question on

budget in 2010.

     --The survey showed consumers' assessment of current finances dropped 6.5%

to 83.0 -- the lowest level since September last year and 7.3% below the long

run average. The result indicates respondents expect tax cuts to be positive for

the economy but have limited significance for their own financial position. 

     --Views around housing fell further in May. The "time to buy a dwelling"

index fell 2.8% to 101.1, a six-month low and well below the long-run average of

120. House price expectations declined 0.5% to 129.4, down 13.6% from the recent

peak in February last year, though still slightly above long-run average of

127.5. Significantly, expectations remain notably weaker in New South Wales at

120.6.

     --Even as views on finances and housing deteriorated, consumers became more

confident about labor market conditions. The Westpac Melbourne Institute

Unemployment Expectations Index, which can be viewed as a measure of consumers'

sense of job security, dropped 4.5% to 120.0 in May, a seven year low (recall

that lower reads mean fewer consumers expect unemployment to rise in the year

ahead).

--MNI Sydney Bureau; tel: +61 2-9716-5467; email: sophia.rodrigues@marketnews.com

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