Conditions may be good in the business sector but there does not seem to be evidence of Australian households feeling the same way. The Westpac-Melbourne Institute consumer sentiment index fell for a third month in a row in May to record a drop from 98.0 to 96.2. Any reading below 100 indicates the number of consumers who are pessimistic is more than the number of consumers who are optimistic. Westpac senior economist Andrew Hanlon said, “The index is now back in firmly pessimistic territory with the June reading the weakest since the RBA’s 2016 rate cuts. Although confidence is not overly weak it has shown a clear downtrend since mid-2016.”
Confidence around the wider economy fell sharply in early June and survey respondents were slightly more pessimistic about keeping their jobs. However, they also expect their own finances to improve in the next 12 months. AMP Capital’s Shane Oliver put the results down to multiple factors. “The combination of poor wages growth, high levels of underemployment, bank rate hikes, higher electricity prices, talk of an increase in the Medicare levy et cetera, are likely all depressing consumer confidence.”