After a lengthy divergence between consumer sentiment and business confidence in Australia which began in 2014, the two sectors converged again around July 2018. Both measures have been around or under neutral levels in recent months but business sentiment has been falling from a higher base, whereas consumer sentiment has been stagnating at or close to neutral levels for some years. This latest consumer sentiment survey indicates households continued to display a certain stoicism in the face of global uncertainties.
According to the latest Westpac-Melbourne Institute survey conducted over a week in early September, average household optimism has slipped a little to return to just under neutral levels. The Consumer Sentiment Index gave back some of August’s rise as it fell from 100 to 98.2. 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.
Westpac chief economist Bill Evans said, “The consumer mood has lapsed back into slight negative territory again with continued pressure on family finances and concerns about the near-term outlook weighing on sentiment.”
The report did not cause any ripples in local markets. US Treasury yields had increased noticeably overnight and Australian government bond yields largely followed suit. By the end of it, 3-year ACGB yields had gained 4bps to 0.88%, the 10-year yield had increased by 6bps to 1.14% and the 20-year yield finished 7bps higher at 1.55%.