The Westpac Melbourne Institute Consumer Sentiment Index was unchanged at 78.5 in March, sitting at near historical lows and marks the second consecutive month of extremely weak consumer confidence.

Index reads below 80 are rare, back-to-back reads even rarer, Westpac chief economist Bill Evans said. “Both the Covid shock and Global Financial Crisis saw only one month of sentiment at these levels. Runs of sub-80 reads have only been seen during the late 1980s and early 1990s recession and in the ‘banana republic’ period when the Australian dollar was in free-fall and the Federal Government lost its triple-A rating.”

However, an emerging area of concern is the outlook for sales of major household items with the ‘time to buy a major household item’ sub-index falling a further 4% in March, following a 10% fall last month.

“Apart from two brief tumbles during the GFC that were quickly reversed, this is the lowest read on this component in the history of the survey going back to 1974 and weaker than the poorest reads during the recessions of the mid 1970s, the early 1980s and the early 1990s,” Evans said.

Around 85% of respondents viewed news on inflation, interest rates and economy as unfavourable. And while confidence around jobs has been a lone positive feature in an otherwise bleak consumer landscape over the last year, it continues to show signs of weakening in 2023.

When it comes to housing, interest rate rises have again taken their toll. The ‘time to buy a dwelling,’ index fell 11.1% which is the weakest read on buyer sentiment since September 1989, when standard variable mortgage rates were 17%, Evans said.

“Some of the fall in buyer sentiment may also reflect concerns that prospects of a price-led improvement in affordability are fading. The state detail shows the mix of falling buyer sentiment and rising price expectations were particularly pronounced in NSW and Victoria,” he said.