During most of the period between 2014 and 2018 a divergence between consumer sentiment and business confidence in Australia was evident. Normally, the two sectors could be expected to generally track the same path, so an extended difference between the two was somewhat unusual. However, around July 2018, the two sectors converged again only to go their separate ways again in September. In December the business sector began to show some signs of weakness and now measures of consumer confidence have pulled back as well.
According to the latest Westpac-Melbourne Institute survey conducted in early-January, average household optimism fell away as the Consumer Sentiment Index dropped back under 100 from December’s reading of 104.4 to 99.6. Any reading above 100 indicates the number of consumers who are optimistic is greater than the number of consumers who are pessimistic. The long-term average reading is just over 101.