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Bill Evans, Research Analyst at Westpac, notes that the Australia’s Westpac Melbourne Institute Index of Consumer Sentiment declined 2.3% to 103.6 in August from 106.1 in July.

Key Quotes

“The consumer mood deteriorated in August, giving back about half of the surprisingly strong gains seen in June and July. Those gains look to have been partly a positive response to the tax cuts announced in the May Budget, which passed into legislation in June, the first round of cuts coming into effect in July.”

“The June-July gains also came against a backdrop of adverse developments on the global trade front and an emerging price correction in the Sydney and Melbourne housing markets.”

“Despite the latest decline, the Index is still in positive territory overall, 5.5% above the average in 2014 to 2017. August marks the ninth successive month that the Index has been above the 100 level, indicating optimists outnumber pessimists, a clear turnaround on the twelve months in which 11 out of 12 readings were below 100.”

“Consumer views on unemployment continue to soften, pointing to a shift in labour market conditions. The Westpac Melbourne Institute Unemployment Expectations Index rose 2.8% to 129.3 and has now risen 7.2% from its February low (recall that higher reads mean more consumers expect unemployment to rise in the year ahead).”

“Consumer expectations for house prices stabilised in August. The Westpac Melbourne Institute Index of House Price Expectations edged 0.3% higher to 112.8 in August.”