Australia: Consumer confidence falls back into pessimistic territory in March
March 12, 2015
The Westpac-Melbourne Institute Survey of Consumer Sentiment fell from 100.7 points in February to 99.5 points in March. February had marked the first time in a year that the indicator was above the 100-point threshold that separates optimistic from pessimistic territory.
March’s deterioration mainly reflected a moderation in consumer sentiment following last month’s peak that resulted from the Central Bank’s interest rate cut. As the Institute pointed out, “some softening in sentiment was always likely in March given the big lift last month following the RBA’s surprise 25bp rate cut. Interest rate moves often generate a big initial reaction that dissipates over time.” Consumers were slightly more upbeat regarding the economic outlook for the next twelve months as well as for the next five years. However, they were particularly more pessimistic regarding expectations for purchasing household items. This category recorded the lowest result since 2009, and it is highly likely that the decline was due, in part, to consumers’ reaction to the Australian dollar’s recent weakening against the U.S. dollar.
Author: Cecilia Simkievich, Economist