Australia: Consumer sentiment moves to pessimistic territory in March following a disappointing Q4 2018
The Westpac-Melbourne Institute consumer sentiment index fell from 103.8 in February to 99.8 in March, marking the worst reading in one year and a half. Therefore, it moved below the 100-point mark that separates optimism from pessimism among consumers.
March’s drop was the result of a broad-based deterioration in the sub-components of the index, largely driven by the recent-release of disappointing national accounts data for Q4 2018 amid the ongoing downturn in the real estate market. Consumers’ general economic outlook on the next 12 months plunged, and their expectations of economic conditions in the next five years became quite gloomier. Moreover, consumers’ assessments of their personal finances compared to a year ago as well as their expectations of their finances in the next 12 months worsened significantly, likely due to negative wealth effects from falling house prices and a high stock of debt. Moreover, the number of consumers expecting unemployment to worsen in the year ahead jumped to the highest level in 18 months, while respondents’ propensity to purchase major household items weakened only slightly. On the other hand, consumers were more likely to buy a dwelling as they expected further house price corrections.