Australia: Consumer confidence drops in November
November 10, 2010
Australian consumer confidence dropped in November. The index of consumer sentiment, published by Westpac and the Melbourne Institute, fell from the 117.0 points recorded in October to 110.7 points in November. Despite the drop, the index remains well above the long-term average level of 100 points. According to Westpac and the Melbourne Institute, the result comes as a surprise, as the decision of the Reserve Bank of Australia to raise the cash rate by 25 basis points was expected to have a stronger downside effect on the confidence gauge. On the other hand, the positive developments in the labour market and the rally of the Australian Dollar against the US Dollar, which bode well for private consumption, probably partly helped offsetting the negative impact of the rate hike. The outlook on economy deteriorated, as expectations on the general economic conditions in the next twelve months fell by 9.8% and longer term expectations (5 years) dropped by 6.4%. On the other hand, even though households have a more pessimistic assessment of their financial situation compared to a year ago, they are more upbeat about their finances over the next twelve months. Finally, while consumers are less prone to buy a major household item than last month, buying intentions remain at the highest levels in the last three years.
Author: Armando Ciccarelli, Head of Data Solutions