Australia’s consumer confidence weakened in August as the spread of the coronavirus situation locally is weighing on expectations, survey data from Westpac showed on Wednesday.
The Westpac-Melbourne Institute Index of Consumer Sentiment fell 4.4 percent to 104.1 in August from 108.8 in July. This was the lowest point in a year but remained in positive territory, even in parts of the country facing the biggest virus challenges.
The availability of effective COVID vaccines is a key source of support for confidence.
All index components recorded declines in August with the biggest falls around expectations for the economy over the year ahead and assessments of ‘time to buy a major item’.
The ‘economy, next 12 months’ sub-index dropped 8.3 percent to 100.4 in August. The medium term view on the economy was less affected, the ‘economy, next five years’ sub-index down just 1.2 percent to 109.2.
Around family finances, consumers were understandably less confident about the year ahead, the ‘finances, next 12 months’ sub-index retracing 2.7 percent to 107. The ‘finances vs a year ago’ sub-index recorded a milder 1.9 percent decline to 91.9.
The ‘time to buy a major item’ sub-index posted a sharp 7.2 percent drop to 112 in August.
The Westpac Melbourne Institute Index of Unemployment Expectations rose sharply, rising 13.7 points to 124.6. At the same time, the House Price Expectations indicator declined 1.6 percent in the month but was still at a very elevated level at 155.8.
Matthew Hassan, a senior economist at Westpac said the central case remains that widespread vaccination will see a reopening recovery underway by the November Board meeting, meaning this will still be an appropriate time for the Reserve Bank to start scaling back its bond purchases.