World Economy

Australia CCI Dips Amid Housing Market Jitters

Australia CCI Dips as Housing Market Jitters RiseAustralia CCI Dips as Housing Market Jitters Rise

Australian consumers are more pessimistic about the future economic outlook and the housing market, according to a recent survey by Westpac.

The Westpac—Melbourne Institute Index of Consumer Sentiment—revealed that consumer confidence edged down in April by 0.7% to a reading of 99.0, reported.

The latest data marks the fifth consecutive month when the index has been below 100—indicating that pessimists are slightly outnumbering optimists.

Economists believe the data offers fairly mixed indications on Australia’s economic outlook, with Westpac’s chief economist Bill Evans noting there were “diverse movements in the components of the index” in April.

Respondents appeared to be more confident about their finances, but Evans is warning that any significant negative shocks in the budget would render “considerable damage to the confidence index”.

“Expectations for the economy fell during the period with the ‘economic conditions in the next 12 months’ and ‘economic conditions in the next five years’ sub-indexes dropping by 6.5% and 2.7% respectively,” he noted in the report.

“Consumer attitudes towards spending also fell, the ‘time to buy a major household item’ sub-index down 2.9%.” Not surprisingly, Evans said confidence in the housing market also deteriorated. “The ‘time to buy a dwelling’ index fell by 3.3% to 96.3,” he noted.

“This read is 6.2% below the average over the last 12 months and 20% below the peak levels seen in early 2015. The fall in April reflected large falls in the two major markets—Sydney and Melbourne—partially offset by solid gains in Brisbane and Perth.

“Clearly affordability factors were behind this divergent response.” However, he said the overall result was surprisingly positive and “welcome” given the raft of negative reports out at the moment.

“Arguably these factors could have been expected to produce a marked fall in confidence, particularly around the economic outlook ... and indeed the components of the index relating to the economic outlook have deteriorated,” he said.

Capital Economics chief Australian economist Paul Dales said consumer confidence has been trending down for the last six months or so. “That’s consistent with the idea that the outlook for employment isn’t particularly strong, the outlook for wage growth isn’t particularly strong, so households aren’t about to go out and start spending a lot more,” he told ABC News.

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