Australia | Apr 09 2008
By Rudi Filapek-Vandyck
The string of forward indicators indicating gloomier times ahead for the Australian economy continues with the Westpac-Melbourne Institute Index of Consumer Sentiment falling by 1.3% in April from 88.6 in March to 87.4.
Westpac economists point out this latest fall pushes the index down to its lowest level since June 1993. The lowest level since [fill in more than five years ago]- it’s becoming a regularly recurring sentence now when it comes to economic indicators in Australia.
The three months to March showed the sharpest three month decline in the Index (21.2%) since its introduction in January 1975, the economists point out. They are quick to add that with the Reserve Bank not raising interest rates since the last survey it would have been “reasonable” to see some modest recovery in the index this month. But it just hasn’t happened.
Westpac economists report the survey highlights that households’ concerns have gone beyond angsting about higher interest rates. Confidence of those consumers who rent housing was down sharply by 9.3% whereas confidence of those respondents who have a housing loan was down by only 0.1%, supporting recent research highlighting the current crisis in the housing rental market.
Three of the five components of the Index fell in the month, Westpac reports, pointing out that of most concern was the collapse in sentiment towards buying major household items. That component fell by 12.7% to be down by 45.8% over the year, compared to the annual fall of 24.2% in the overall index.
The outlook for economic conditions over the next 12 months fell by 6.4% while the 5 year outlook was down by 0.3%. Expectations for family finances over the next twelve months improved by 8.1% while opinions on “finances compared to a year ago” improved by 2.7%.