Australia: Weak incomes take gloss off improved consumer mood - Westpac

Matthew Hassan, Research Analyst at Westpac, notes that Australian consumers posted their most positive start to a calendar year since 2010 but concerns around family finances remain a key weakness.

Key Quotes

“The Westpac Melbourne Institute Consumer Sentiment Index has continued to rally, rising 1.8% in Jan to be up 3.7% since Oct and 10% from its Aug low. While at 105.1, the Index is ‘cautiously optimistic’ rather than buoyant, Jan marked the best monthly read since late 2013 and the most positive start to a calendar year since 2010.”

“All index components have improved since Q3. That said, while both economic outlook sub-indexes are now comfortably above their long run average, sub-indexes tracking consumer views about their own finances remain at more subdued levels around long run avgs.”

“The rise in consumer sentiment narrows the gap with business confidence which was notably firmer throughout 2017. However, there remains a stark wedge in views on ‘conditions’ with businesses reporting much stronger reads than the subdued consumer views on finances. While there are many factors, the weaker picture on consumer incomes looks to be the main point of difference.”