Consumer confidence back to near historic lows
Consumer confidence in the economic outlook has sunk to levels only “modestly above historic lows”, according to a Westpac McDermott Miller poll.
Westpac said its index of consumer confidence sank 11 points to 82.2 points in June, erasing gains that had been made over the previous six months.
An index level below 100 points suggests more people are pessimistic about the economic situation than optimistic and the index has averaged 108 points since the late 1980s.
Confidence is now sitting near the lows over the past year, which were not much different from the dips at the height of the global financial crisis and during the recession of the early 1990s.
Westpac senior economist Satish Ranchhod said people’s hopes for an early cut in interest rates had reduced in recent months as inflation remained sticky.
“Ongoing high borrowing costs, combined with a more uncertain labour market are undermining consumer confidence Against that backdrop, 42% of households told us their financial position had deteriorated over the past year, while just 14% said it had improved,” he said.
Westpac, like most banks, is not currently forecasting a drop in the official cash rate before next year.
“With pressures on their finances and nervousness about where the economy is heading, households are keeping their wallets shut,” Ranchhod said. “Even with strong population growth, retail spending levels have been falling in recent months.”
The survey results were based on responses from 1553 adults who were polled between June 1 and June 12.