Australian households may not be feeling particularly confident at the moment but then again, they do not feel particularly pessimistic, either. The Westpac–Melbourne Institute survey of households over the period 8 May to 13 May gave results which in overall terms are not much different from the survey in April although the “evidence around the labour market in this survey is somewhat more encouraging.”
The Westpac-Melbourne Institute consumer sentiment index limped a little lower in May, the second month in a row where the index has barely moved. This time it moved from 99.0 to 98.0, which is not far from a neutral score of 100. Any reading below 100 indicates the number of consumers who are pessimistic is more than the number of consumers who are optimistic.
Despite the general acceptance of the Federal budget by the community, it appears to have had very little influence on consumers’ views. According to Bill Evans, Westpac’s chief economist, the RBA will view these figures and other supporting data with some concern. “[W]ith a flat response to the Budget, respondents remaining concerned about their finances and no signs of any improvement in wages prospects, the risks of weak household spending feeding back onto employment and investment will remain a concern for policy makers.” The RBA may not be worried about how households are reacting now, but they will worry about how households react in the months to come.