Except from Westpac Consumer Sentiment Survey
Westpac–Melbourne Institute Consumer Sentiment Survey was a mixed bag. Headline
sentiment posted a solid rise, mainly driven, we suspect, by a more relaxed
outlook for interest rates. Responses to the various ‘time to buy’ questions
were also perkier, particularly for housing.
remains in firmly pessimistic territory overall and aversion to risk is still
Meanwhile a sharp
deterioration in unemployment expectations lends more weight to the view that
consumer demand is entering a cyclical weakening. Indeed, the worsening picture
on job security effectively negates the good news from improved sentiment.
Not only does it
suggest actual labour market conditions are deteriorating, it also points to a
material downturn in discretionary spending and is an additional negative for
already soft housing markets where job loss concerns inhibit demand.
For now we have made
only minor changes to our consumer forecasts, mainly to incorporate stronger
than expected Jun quarter spending estimates from the national accounts and
partial data for Jul. These give a firmer near term picture for consumer demand
but the broad forecast of a material weakening in remains intact.
Looking ahead, steady
rates and a reduced threat of rate rises should continue to allay consumer
fears of rate hikes. But with rising uncertainty around the global economy and
growing signs of weakness in local labour markets, we suspect that steady rates
on their own will not be enough to restore consumer confidence.
We continue to expect
that the next move from the RBA will be rate cuts starting with 25bps in Dec
and culminating in a total reduction of 100bps by Sep 2012.
Australian consumers are
likely to remain badly out of sorts at least until an easing bias is apparent
and most probably until actual rate moves are enacted.
Bank is a division of Westpac Banking Corporation ABN 33 007 457 141.
Information current as at date above. This information has been prepared
without taking account of your objectives, financial situation or needs.
Because of this you should, before acting on this information, consider its
appropriateness, having regard to your objectives, financial situation or
needs. Westpac’s financial services guide can be obtained by calling 132 032,
visiting www.westpac.com.au or visiting any Westpac Branch. The information
may contain material provided directly by third parties, and while such
material is published with permission, Westpac accepts no responsibility for
the accuracy or completeness of any such material. Except where contrary to
law, Westpac intends by this notice to exclude liability for the information.
The information is subject to change without notice and Westpac is under no
obligation to update the information or correct any inaccuracy which may become
apparent at a later date. Westpac Banking Corporation is regulated for the
conduct of investment business in the United Kingdom by the Financial Services
Authority. If you wish to be removed from our e-mail, fax or mailing list
please send an e-mail to firstname.lastname@example.org
or fax us on +61 2 8254 6934 or write to Westpac Economics at Level 2,
275 Kent Street, Sydney NSW 2000. Please state your full name, telephone/fax
number and company details on all correspondence. © 2011 Westpac Banking