Quick Bites | Consumer sentiment down, business confidence up
September 21st, 2023 | Article
By: Paul Zwi
Latest data released in Australia show consumer sentiment declined even further from already low levels, whereas business conditions levels climbed a little.
The Westpac-Melbourne Institute Consumer Sentiment index in Australia fell by 1.5% month-over-month to 79.7 in September 2023, after a 0.4% decrease in August, as a decision by the RBA to hold interest rates steady for the third straight month was unable to ease worries over the economic outlook and family finances. The index has been below the neutral 100 mark since March 2022, the longest streak since the early 1990s recession.
Chart 1: Australia Consumer Confidence
Source: Trading Economics
Meanwhile, as noted above, business conditions eked out a small gain. Business conditions strengthened (13 in August versus 11 in July), amid a broad uptick in sales (up 1 point to 18), profitability (up 2 points to 13), and employment (up 3 points to 9). Forward orders gained 1 point to a flat reading, while capacity utilisation was above 85% near its historical highs. Meantime, growth in labour costs was 3.2% higher in the past three months, easing slightly from the prior reading of 3.7%; and purchasing costs rose to 2.9% from 2.8%.
Consumers are feeling the pinch, whereas businesses appear to be a little more comfortable with the outlook. Probably best in this environment to avoid discretionary retailers as interest rate rises start to pinch and unemployment rates rise.
Chart 2: Australia Business Confidence
Source: Trading Economics
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