After a lengthy divergence between measures of consumer sentiment and business confidence in Australia which began in 2014, confidence readings of the two sectors converged again around July 2018. Since then, both types of readings have deteriorated, with consumer confidence leading the way. Recent surveys paint a picture of a cautious consumer, indeed a somewhat pessimistic one.
According to the latest Westpac-Melbourne Institute survey conducted in the first week of February, average household optimism has fallen in March after a brief lift occurred in February. The Consumer Sentiment Index declined from 95.5 to 91.9, its lowest reading since December 2014.
Any reading below 100 indicates the number of consumers who are pessimistic is greater than the number of consumers who are optimistic. The latest figure is also very much at the low end of the normal range and well below the long-term average reading of just over 101.
Westpac senior economist Matthew Hassan said, “The worsening coronavirus outbreak and associated rout in financial markets have had a major impact on sentiment this month.”