Westpac Consumer Confidence Historically Depressed

Westpac consumer confidence in March was steady at the depressed level of 78.5. Two consecutive months of less than 80 are very rare and have only occurred during the early 90s recession and 1986’s “banana republic” period. Renters were particularly pessimistic. While spending has been holding up better than this series has implied for some time, the RBA is likely to be concerned at confidence remaining below 80.

• The RBA meeting occurred part way through the survey week and it appears that the 25bp hike was widely expected as the confidence readings pre- and post-meeting were very similar. 74% of those surveyed expect rates to rise further over the next year with 45% anticipating a rise of +1pp down from 80% and 53% respectively.
• The “time to buy a major household item” fell 4% to 74.9 after falling 10% in February, apart from the financial crisis, this is a historical low. Possibly reflecting an increase in unemployment expectations which rose 2.9% after +10.6% in February but it remains below the long-run average.
• Consumers are most concerned about inflation, rates and the economy with 85% finding news on these areas unfavourable up from 80% in December. 58% of respondents remembered news related to inflation.
• In terms of housing, “time to buy a dwelling” fell 11.1% to 65.7, below its recent 75-80 range as housing affordability continues to deteriorate. This is the weakest since September 1989. However, house price expectations rose 8.6% to an 11-month high but only 5% say “real estate” is a wise place to put savings.
• See press release here.

Source: MNI - Market News/Bloomberg/Westpac