The Westpac Melbourne Institute Index of Consumer Sentiment recorded a modest rise in November, however prospects for the Christmas season have been described as “disappointing”.Sentiment rose 1.9 per cent in November to 96.6, up from 94.8 in October, in a result Westpac chief economist Bill Evans described as “unsurprising but still disappointing”.
“The index is 12.5 per cent below its level of a year ago and 3.6 per cent below its level before the lead-up period to the Commonwealth budget in May,” Evans stated.
“In fact, we have now seen nine consecutive months where pessimists have outnumbered optimists. That is the longest run of pessimists outnumbering optimists since the global financial crisis and before that the recession of the early 1990s.”
Evans noted the November sentiment results are watched as an indicator as to prospects for the Christmas trading period.
In light of this, he stated a 0.8 per cent fall in the index component “good time to buy a major household item” is “disappointing”, particularly with the component now down by 13 per cent over the last year.
Evans stated there is “further disturbing news” ahead of Christmas trading, with respondents to the question, “Do you think that you will spend less, about the same, or more on Christmas gifts compared to last year?”, answering 38 per cent as “less”, 50 per cent as “same”, and 12 per cent as “more”.
“The net balance (more minus less) of minus 26 per cent is the worst since 2008 (minus 34 per cent), which was in direct response to the global financial crisis,” he stated.
“Over the subsequent five years, the net balance has been tightly clustered around minus 22 per cent, so the result for 2014 is a marked deterioration relative to the last five years.”
Australian National Retailers Association (ANRA) CEO Anna McPhee stated the figures and Christmas spending expectations “haven’t provided the spark to light up the Christmas shopping period retailers were hoping for”.
However, McPhee stated, while small, “the ongoing improvement in sentiment is a hopeful sign consumers are starting to feel more confident again”, adding that retailers continue to be “optimistic about the way consumer confidence is tracking”.
“The sector’s expectation to achieve 6 per cent year-on-year retail sales growth come December remains the target and retailers will be working hard in the weeks ahead,” she stated.
“ABS retail sales numbers are continuing to point to positive and sustainable spending growth and retailers remain optimistic that the momentum will continue.”
