More bad news for businesses has been spelt out today, with the Westpac-Melbourne Institute Index of Consumer Sentiment for August falling to levels not seen since May 2009.
Consumer sentiment fell 3.5 percent from 92.8 in July to 89.6 in August, with Westpac Chief Economist Bill Evans commenting that after a fall of 8.3 percent in July, this latest dive in confidence is “sending a significant message.”
“The Index is at its lowest level since May 2009. There were a number of prints in the 85 – 90 range for the Index during that 2008/2009 period. However, you need to look back to the recession of the early 1990’s to see any previous sustained prints for the Index in the sub 90 range.”
According to Evans, recent financial turmoil in global financial markets, along with concern about interest rates, house prices, the carbon tax and job availability, are to blame for the dip.
“The modest fall in Sentiment despite the Reserve Bank holding rates steady at its recent meeting (until recently) a surging Australian dollar and coming after an 8.3% fall from already low levels clearly points to the consumer remaining cautious.”
Results across the Westpac-Melbourne Institute’s sub-index’ were varied for the month:
- The sub-index measuring how respondents assess their own financial position relative to a year ago fell 3.5 percent and with the exception of June – July 2008, is the lowest read since the early 1990’s.
- The sub-index tracking respondents’ expectations for their finances over the next 12 months fell 5.1 percent to sit at its lowest levels since the early 1990’s.
- The sub-index tracking views on the outlook for economic conditions over the next 12 months fell 13.5 percent, and has now slumped by over 30 percent since April.
- The sub-index tracking consumer views on the outlook for the economy over the next 5 years fell 0.6 percent.
- The sub-index on whether now is good time to buy a major household item rose 2.4 percent.
- The index tracking views on whether now is a good time to buy a car fell 6.2 percent, to register the lowest print since 2008, and
- The time to buy a dwelling index dropped by 3.9 percent.