Pessimists outweigh optimists.
The Westpac Melbourne Institute Index of Consumer Sentiment fell by 3.9% to 97.3 in December from 101.3 in November.
Westpac chief economist, Bill Evans (pictured) said, “Today’s result has jolted stability and confidence. The Index is now at its lowest level since April this year when it printed 95.1. In May, in response to the Reserve Bank’s decision to cut the overnight cash rate, in addition to the Federal Budget, the Index surged by 8.5% to 103.2.”
“At 97.3 there is now a clear majority of pessimists over optimists with the Index down 3.5% relative to a year ago. The fall in confidence is likely related to renewed concerns around the economy, interest rates and the labour market.
“Of most concern at this time of year was a disturbing 7% fall in assessments of ‘time to buy a major household item’. This component is down by 6.3% on the comparable print from a year ago.
“Meanwhile, the ‘time to buy a dwelling’ index lifted by 2.6% up 3.7% on a year ago. This mainly reflects a sharp recovery in confidence in Sydney.
“The Reserve Bank Board next meets on February 7. We expect the Board to keep rates on hold.”