Consumer confidence falls despite hand-outs
Consumer confidence falls despite hand-outs

Cash rate cuts and government pay-outs have failed to lift the confidence of Australian consumers, according to a monthly survey.

The Westpac/Melbourne Institute Index of Consumer Sentiment fell 2.5 per cent to 96.6 in August, from 99.1 in July.

Westpac chief economist Bill Evans said he was disappointed by the result, given stronger market conditions and financial benefits which should have boosted sentiment.

"There has been enough positive news around since the last survey, and generally over the last few months, to have sustained an upswing in consumer sentiment," he said.

Specifically, the government's carbon tax rebates, earlier rate cuts from the Reserve Bank of Australia), and improvements in retail and employment figures provided increasingly good conditions for households.

However, the index appeared to show sentiment in a "cautiously pessimistic" range, according to Mr Evans.

"This is the sixth consecutive month that the index has registered below 100, averaging 96.2," he said.

"This is unusual - the only comparable periods since the recession of the early 1990s are in 2000-01 when the index printed an average of 96.5 over an eight-month period and in 2008-09 when it averaged 88.0 over a 16-month period."

Mr Evans said suggestions that the RBA might not cut the cash rate again this year could have unnerved households, and warned that weak consumer sentiment could spell the end for good retail spending numbers earlier in the year.

Four of the index' five components showed falls from last month, with only the sub-index viewing family finances in the next 12 months showing as a rise of 3.3 per cent.

The largest fall - of 6.3 per cent - was in comparison of family finances as compared to a year ago.

Westpac said it did not expect the RBA to cut rates at its next meeting in September, but there was a case for easing by the December quarter.

The latest data from the institute is based on survey interviews it conducted between August 6 and August 10.

The West Australian

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