The Westpac-Melbourne Institute Consumer Sentiment Index fell 4.5% in January, pull back that was to be expected, Westpac chief economist, Bill Evans said.

“All components of the index fell with respondents less positive about their finances. The family finances relative to a year ago’ component fell 7% while spending intentions were also down with the ‘time to buy major household items’ component slipping 2.8%,” Evans said.

“Since the last survey in the second week of December we have seen domestic border closures, the emergence of Covid clusters in some states and the sharp upswing in Covid cases overseas, notably the US and the UK. This result compares to the 15% fall that was registered over July and August last year as the nation was shocked by Victoria’s severe second wave and associated hard lockdown.”

However, Evans said it still points to a healthy consumer outlook with optimists clearly outnumbering pessimists while the index is 14.6% above the level of a year ago and 41.5% above the low in April.

This month’s survey continues to point to solid employment conditions with the Unemployment Expectations Index increasing 11.9%, still 6% below its level in November and 11% below its level a year ago and, excluding last month, is at its lowest level for nearly 10 years.

The ‘time to buy a dwelling’ index was flat although there was a marked contrast between the major states with NSW up 3.9% and Victoria down 6.2%.