Quick Bites | Australian Consumer Sentiment Remains Subdued

The Westpac Consumer Sentiment Index measures the change in the level of consumer confidence in economic activity. On the index, a level above 100 indicates optimism and below indicates pessimism. The data is compiled from a survey of about 1,200 consumers which asks respondents to rate the relative level of past and future economic conditions.  

A higher-than-expected reading should be taken as positive/bullish for the AUD, while a lower-than-expected reading should be taken as negative/bearish for the AUD.  

The Consumer Sentiment index in Australia decreased to 82.7 in July 2024, the lowest in six months, declining from 83.6 in June of 2024. Consumer Confidence in Australia has averaged 100.4 points from 1974 until 2024, reaching an all-time high of 124 points in May of 2007 and a record low of 64.6 points in November of 1990.

The fall in Australian consumer sentiment was driven by weaker perceptions of personal finances and in conjunction with a sharp rise in expectations around the level of future mortgage rates. Westpac noted that “fears of persistent inflation and further interest rate rises are again weighing more heavily on the consumer mood” and have offset any boost from the arrival of the ‘stage 3’ tax cuts and other fiscal support measures.

On interest rates and housing, expectations for the level of mortgage rates rose sharply (+12.8% month-on-month), marking the steepest rise since the start of 2022, following the firmer-than-expected May monthly CPI data and associated RBA media commentary. Nearly 60% of consumers surveyed now expect mortgage rates to increase over the next year. That said, the ‘time to buy a dwelling’ index rose +4.0% mom in July, while house price expectations index fell -1.6% mom. 

Tracking Australian Consumer Sentiment over 10 Years 

Source: Trading Economics