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 high base, whereas consumer sentiment has been stagnating at or close to neutral levels for some years. This latest measurement of consumer sentiment indicates households have recovered from July’s drop and remain stoic in the face of global uncertainties.
According to the latest Westpac-Melbourne Institute survey conducted over a week in early August, average household optimism has rebounded back to broadly neutral levels after it had fallen in July. The Consumer Sentiment Index reversed most of July’s fall as it increased from 96.5 to 100.0, although it is still short of June’s reading of 100.7. 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.