Australian consumers may be relatively more optimistic than they were at the end of 2017 but that itself may be an optimistic description. A more accurate picture would be given by describing consumers as slightly less pessimistic than they were a month ago. The Westpac-Melbourne Institute consumer sentiment index rose ever-so-slightly in January, recording a 0.1 increase to 97.4. Any reading below 100 indicates the number of consumers who are pessimistic is more than the number of consumers who are optimistic.
Financial markets were unperturbed by the results. By the close of business, 3 year yields were unchanged at 2.0% while 10 year yields slipped 1bp to 2.72%. The AUD was around 0.5 US cents lower at just over 75 US cents.
Economists had different responses to the data, ranging from the outright negative to something a vaguely encouraging. Westpac’s Elliot Clarke described the result as disappointing but then again “there are likely to be lingering effects from the shock of the announcement just before the December survey that the economy contracted by 0.5%.” Commonwealth Bank economist Kristina Clifton’s view was also surprised a bounce in confidence had not eventuated “given that the economic data since the GDP result has generally been positive. The good news is that unemployment expectations fell by 0.8% and should ease further this year as the unemployment rate moves lower.”