It is said “money can’t buy you happiness”. Nor, it seems, can it buy confidence.
- Consumer confidence fell sharply in July despite news that interest rate and tax cuts would soon offer households financial relief
- The deeper dive into pessimism was largely driven about fears for the economy
- The Westpac survey also found consumers were increasingly worried about job security, but more optimistic about the housing market
Despite the Reserve Bank delivering successive months of lower borrowing costs and the Federal Parliament clearing the way for immediate tax relief, Australian consumers became resolutely pessimistic in July.
The long-running Westpac-Melbourne Institute consumer survey found sentiment fell 4.1 per cent, plunging into pessimism.
While the overall June reading of 100.7 was marginally optimistic, consumers questioned immediately after the first interest rate cut were far glummer about the economy.
The July survey, based on 1,200 interviews, further entrenches the view that rate cuts are equated with a deteriorating economy, rather some sudden good fortune.
It was conducted in the first week of the month, taking in the RBA’s second 25-basis-point rate cut, as well as news the Federal Government’s tax cuts had been passed unscathed.
“The fall in sentiment this month is troubling as it comes against what should have been a supportive backdrop for confidence,” Westpac’s Matthew Hassan said.
The other good news that failed in impress consumers included more signs that the Sydney and Melbourne housing markets are stabilising and a truce in the US-China trade war.
“Despite these positives, Australian consumer confidence has fallen to a two-year low,” Mr Hassan noted.
Consumer sentiment by category
|Index||Average||July 2019||Percentage change 1 month||Percentage change 1 year|
|Family finance vs 1 year ago||89.4||85.7||+3.0pc||-3.4pc|
|Economic conditions vs next 12 months||90.9||87.1||-12.3pc||-2.2pc|
|Time to buy a dwelling||119.6||123.2||+5.4pc||+19.5pc|
|House price expectations||125.5||119.4||+8.9pc||+6.1|
Source: Westpac-Melbourne Institute
More to come.