Australia: Consumer confidence drops for fourth consecutive month
August 10, 2011
In August, the index of consumer sentiment, published by Westpac and the Melbourne Institute, dropped to 89.6 points, which was down from the 92.8 points recorded in July and marks a fourth consecutive drop in the index. The result represents the second consecutive month that the index has idled below the long-term average of 100 points and represented the lowest confidence level since May 2009. The survey was conducted over the period between 1 and 6 August. Surveyors elaborated results based on answers for the periods before and after 5 August in order to assess the effects on consumer sentiment of the ongoing global turmoil in financial markets following the 4.3% drop of the Dow Jones Index on that date. According to the pre-5 August survey (constituting the 76% of total respondents) sentiment would have dropped to 91.4%, whilst the survey for the 5-6 August period set consumer sentiment at 83.9%. If attained, this would have represented the sharpest drop since October 2008. According Westpac and the Melbourne Institute, fears related to the global financial turmoil added downward pressure to an already subdued outlook, with household sentiment depressed by the introduction of a carbon tax, the high levels in RBA interest rates and developments in the job market. Finally, all sub-components of the index dropped in August. The components that dropped most notably were those related to the economic situation in the next 12 months and in the next 5 years. That said, households' expectations regarding their future personal financial situation deteriorated markedly. Despite this result, households' willingness to purchase durable goods improved in comparison with the previous month's survey.
Author: Armando Ciccarelli, Head of Data Solutions