AUSTRALIA DATA: Economic Outlook Pressuring Households

Westpac consumer sentiment for June fell 2.9% to 80.6, only slightly above April’s recent low, as cost-of-living concerns remain at the fore. Concern about the medium-term economic outlook also weighed on confidence and house price expectations moderated given the budget’s tax changes. Opinion polls are showing a growing discontent with governance and Australia’s direction. The RBA is monitoring surveys closely but is also very aware that often what consumers say and what they do are different.

• Westpac expects the RBA to pause in June but given underlying inflation remains above the top of the 2-3% band, it continues to project further tightening.
• Westpac notes inflation pressures are weighing on households’ assessments of family finances. Compared to a year ago the assessment fell 7.5% and the outlook a year ahead is -8.5%.
• Consumers are significantly more concerned about their financial future than usual and it is not just a rates story as the RBA’s observation that it now has “space” to monitor events drove mortgage rate expectations down 4.8%. Around two thirds of respondents now expect higher rates over the coming year down from 74% in May.
• There was high recall of news on inflation and budget & taxation and 85% reported the former as negative and around 70% the latter.
• Unemployment expectations were steady above the historical average but below April’s recent high.

Australia Westpac consumer confidence vs unemployment expectations 3-mth ma

Source: MNI - Market News/LSEG

• While house price expectations fell 14.9% in June, time to buy jumped 12.6%, likely as a result of more favourable price outlook. Housing seen as an investment at 4.5% is now its lowest since the series began in 1974.

Australia Westpac time to buy a dwelling

Source: MNI - Market News/LSEG