Westpac Consumer Sentiment Points To Persistent Soft Demand

Westpac consumer confidence for March eased 1.8% to 84.4 after rising the previous three months. It remains above January’s level though. Through the volatility, the series has turned up as the RBA now seems firmly on hold, but it remains at depressed levels and improvement in sentiment is slow. Westpac notes that consumers remain “deeply pessimistic” and are more concerned about the economy, thus weak consumption is likely to persist for now.

• The RBA announcement last week seems to have disappointed households, despite the removal of the implicit tightening bias, as expectations of rate cut have increased. Confidence before the meeting was up 10.3% on February, while afterwards it was down 7.8%, which Westpac says is in line with February’s pattern. 40% of consumers still expect a rate hike with 22% a cut, 22% unchanged and 15% “don’t know”.
• In March, inflation continued to be the news item that respondents recalled the most (down to 43% from over 60%) but it is becoming “less acute” with 51% viewing it as unfavourable compared with 74% a year ago. News on taxation, employment and interest rates was seen as more favourable but not the economy.
• The jobs outlook has been fairly steady with unemployment expectations in line with average despite rising 1% m/m in March, consistent with an easing labour market rather than redundancies.
• “Time to buy a major household item” was lower and still well below average.
• “Time to buy a dwelling” remains pessimistic despite being at a 15-month high. Almost 70% of respondents expect house prices to rise further over the coming year.
• See Westpac’s report here.

Source: MNI - Market News/Refinitiv