Australia: Consumer sentiment moderates but remains in positive territory in August
August 16, 2018
The Westpac-Melbourne Institute Index of Consumer Sentiment declined from an over four-and-a-half-year high of 106.1 in July to 103.6 in August. Nevertheless, it remained above the 100 mark that separates optimism from pessimism among consumers, where it has now been for nine consecutive months.
August’s fall was the result of a broad-based deterioration in almost all components of the index, although it was mainly driven by less optimistic expectations on the country’s future economic performance. However, it must be noted that August’s survey comes after two months of strong gains, positively affected by the tax cuts announced in the May Budget. Consumers’ views of economic conditions over the next 12 months declined significantly in August, while they also had lower expectations of the economic outlook over the next five years. That said, both sub-indexes remained well above their long run averages. Consumers were also slightly less optimistic about family finances compared to a year ago and held less positive expectations on family finances for the coming 12 months, most likely a consequence of unremarkable wage growth, dropping real estate prices and higher oil prices. This also explains why households were less willing to purchase major household items in August. However, they were less concerned about future unemployment and were quite more likely to buy a dwelling thanks to recent price corrections in the housing market.
Australia Private Consumption Forecast
FocusEconomics Consensus Forecast panelists see private consumption growing 2.5% in 2018, which is up 0.2 percentage points from last month’s forecast, and 2.5% again in 2019.