Australia: Consumer sentiment moderates in September further but remains in positive territory
September 12, 2018
The Westpac-Melbourne Institute consumer sentiment index declined from 103.6 in August to 100.5 in September. Nevertheless, it remained slightly above the 100-point mark that separates optimism from pessimism among consumers, where it has now been for ten consecutive months.
September’s fall was the result of a broad-based deterioration in almost all components of the index. Consumers’ views of economic conditions over the next five years declined significantly in September. However, their expectations of the economic outlook over the next 12 months recorded the smallest fall, which was probably due to the strong performance of the economy as reflected by the recently released Q2 figures. Moreover, both sub-indexes remained well above their long run averages.
Consumers were also 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 rising mortgage interest rates, subdued wage growth, dropping real estate prices and higher oil prices. These factors translated into a reduced willingness to purchase major household items in September. Meanwhile, they were less concerned about future unemployment although were less likely to buy a dwelling despite ongoing price corrections in the housing market, due to higher mortgage rates.
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.