Australia Consumer Confidence

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Australia: Consumer confidence plummets to three-year low after austere budget announcement

May 21, 2014

The Westpac-Melbourne Institute Survey of Consumer Sentiment fell from the 99.7 points tallied in April to 92.9 points in May. The indicator fell to the lowest level since August 2011 and now sits clearly below the 100-point threshold that separates optimistic from pessimistic territory.

May’s sharp drop was almost entirely a reflection of consumers’ responses to the largely-austere federal budget that the Government presented on 13 May. In fact, May’s survey included a question regarding the impact the federal budget would have on family finances in the next 12 months, which explains the strong pessimistic surge. That said, the Institute also stated that, “it is not unusual that consumer sentiment plummets at Budget time.” Consumers’ assessments of the situation in the housing market deteriorated as the index that tracks whether consumers consider this is a good moment to buy property declined sharply. Conversely, households’ perception of the labor market didn’t register a significant decline.

FocusEconomics Consensus Forecast panelists see private consumption growing 2.6% in 2014, which is unchanged from last month’s forecast. In 2015, panelists see private consumption expanding 2.9%.


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Australia Consumer Confidence May 2014

Note: Index of consumer sentiment; 100-point threshold indicates equal number of positive and negative responses.
Source: Westpac-Melbourne Institute Survey of Consumer Sentiment.


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