Consumer sentiment has experienced its longest run of pessimism since the Global Financial Crisis and, before that, the early 1990s recession, according to the Westpac monthly sentiment index.
Consumer sentiment was up 1.9 per cent this month, but is still 12.5 per cent below where it was 12 months ago and 3.6 per cent below where it was in the lead-up to the May budget.
“We have now seen nine consecutive months where pessimists have outnumbered optimists,” said Westpac chief economist, Bill Evans. “That is the longest run of pessimists outnumbering optimists since the Global Financial Crisis and before that the recession of the early 1990s”.
Consumer sentiment leading into the Christmas period is disappointing with the November index seen as a lead indicator for the selling season.
The results show a 0.8 per cent fall among households that think now is a good time to purchase a major household item. Mr Evans said this was particularly disappointing because the component was “now down by 13 per cent over the last year”.
In more bad news, 38 per cent of households confirmed they would spend less on Christmas gifts compared to last year, 50 per cent said they would spend the same and only 12 per cent said they would spend more.
“The net balance of minus 26 per cent is the worst since 2008 (minus 34 per cent) which was in direct response to the Global Financial Crisis,” Mr Evans said. “Over the subsequent five years the net balance has been tightly clustered around minus 22 per cent so the result for 2014 is a marked deterioration relative to the last five years.”
The components of the index that assess the outlook for the economy have both increased, with a 10.8 per cent increase in economic conditions over the next 12 months and a 2.1 per cent increase in economic conditions over the next five years.
However, assessments of personal household finances were mixed with 4.2 per cent saying their family finances had fallen compared to a year ago while the outlook in family finances over the next 12 months rose 3.1 per cent.
