Consumer sentiment slumped in April, a senior Westpac economist has warned.
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Sentiment among Aussie consumers slumped by 1.6% in April to 94.5 – a drop from from 96.1 (out of 130) in March
according to the Westpac-Melbourne Institute Index on consumer sentiment.
The results released today also shows the Index is now at its lowest level since August last year when consumers were concerned about the global outlook and warnings from the Reserve that higher interest rates were on the cards.
Attitudes towards purchase of property (-0.3%) and cars deteriorated “sharply” (-4.9%) further amid gloomy, which possibly reflects recent petrol price rises.
However, there was some good news- when consumers were asked “whether now is a good or bad time to buy a major household item” – this rose by a “solid” 4.3% – good news for JB Hi-Fi, Bing Lee and Co.
“The very weak reads in April are of significant concern” says Bill Evans, Westpac Chief Economist.
Apart from July 2008 when consumers were in the grip of the GFC, today’s survey on householders views on their personal finances is the lowest since the recession in the early 1990s, noted Evans.
“With fears of rising interest rates or a second global financial crisis having eased we can only conclude concerns around job security; house prices; high debt levels; petrol prices; utilitycosts; and uncertainty around the carbon tax, are weighing heavily on households’ financial concerns.”
However, its not all bad news – the outlook for personal finances over the next 12 months is still better than during the July/August period 2010.
“The results of this survey should be sending a very clear message to the Reserve Bank that Australia needs lower interest rates,” Evans warned.
But maybe Westpac should take its own advice and start passing on rate cuts to consumers more readily rather than waiting to be named and shamed by Treasurer Wayne Swan.
Westpac says it “confidently expect the Board to lower rates by 0.25% and we do not expect that move to be the last. “