Australia: Consumer sentiment weakens again at the start of the year amid devastating bushfires
The Westpac-Melbourne Institute consumer sentiment index dropped to 93.4 in January, from 95.1 in December, against the backdrop of ongoing harsh wildfires around the country. Therefore, sentiment moved further below the 100-mark indicating that there were more pessimists than optimists among Australian consumers.
January’s setback was prompted by declines in the economic components of the index. Consumers’ outlook over the general economic situation in the next five years lost considerable ground in the surveyed month, falling further into pessimistic terrain, as did consumers’ expectations over the general economic situation in the year ahead. This likely caused a reduction in their willingness to buy major household item. On the other hand, consumers’ confidence regarding their current and future financial situation strengthened somewhat in January, and their unemployment expectations improved, consistent with a dip in the unemployment rate in November. Positive signs also came from the housing market, as consumers were more inclined to purchase a dwelling, following building evidence of recovering house prices.