Consumer sentiment fell 8.3 percent in July, to levels not seen since May 2009, thanks to uncertainty about the carbon tax, concerns over the European financial crisis and the ongoing impact of seven rate rises between October 2009 and November 2010.
The Westpac-Melbourne Institute Index of Consumer Sentiment fell from 101.2 in June to 92.8 in July, despite unemployment sitting at the low rate of 4.9%, with Chief Economist Bill Evans referring to the result as “surprisingly weak.”
“The only other time in recent history when the Index has been sustained around the current level was during the period following the GST introduction which also coincided with the bursting of the ‘dot com’ bubble.”
“We then have to go back to the deep recession of the early 1990’s for the next period of comparable weakness in the Index,” he added.
Evans said the current index level is “disturbing low” and the magnitude of the fall ”remarkable,” but did stress the July survey closed the day before the government’s carbon tax announcement.
Evan noted one positive result in the survey however – with confidence in housing rising 3.3 percent to its highest level in 18 months.