MNI DATA ANALYSIS: Australia Sentiment Dn But Budget Well-Recd

--Westpac-MI Consumer Sentiment -0.6% m/m in April to 101.8

By Sophia Rodrigues

     SYDNEY (MNI) - The Westpac-Melbourne Institute's consumer sentiment index

fell in May as a positive boost to confidence from the federal budget was offset

by other factors like rise in fuel prices, weaker house prices and weaker

exchange rate.

     The survey shows the responses to the budget was the best since 2010 when

Westpac began asking additional questions about the budget in the survey. So it

is likely that sentiment may improve next month.

     Data published by Westpac-Melbourne Institute Wednesday showed consumer

sentiment fell 0.6% m/m in May to 101.8. 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 survey showed 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 main positive in the survey was view around labor market as

unemployment expectations fell to a seven-year low. But offsetting this were

deteriorating views on own finances, and on housing market.

     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 indicated respondents expect tax cuts to be positive for the economy but

have limited significant for their 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, consumer 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).

     From Westpac-Melbourne Institute Index of Consumer Sentiment for May

published Wednesday:

                                          May  April

----------------------------------------------------

Sentiment Index                         101.8  102.4

Current-Conditions Index                102.1  104.9

Expectations Index                      101.6  100.7

Family Finances Vs Year Ago              83.0   88.8

Family Finances Next 12 Months          102.1  101.6

Economic Conditions Next 12 Months      104.5  101.0

Economic Conditions Next 5 Years         98.1   99.5

Good Time to Buy Major Household Items  121.2  121.0

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

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