Australia's consumer confidence waned towards the year's end as renewed concerns about the economic outlook emerged, according to recent data from Westpac. On Tuesday, it was reported that the Westpac-Melbourne Institute consumer confidence index decreased to 92.8 in December, down from 94.6 in November.
The survey measures consumer confidence across five sub-indices, with two assessing current conditions and three evaluating future expectations. Notably, all of December's decline was attributed to the forward-looking components.
The sub-index for 'economic outlook, next 12 months' plummeted by 9.6 percent, reaching 91.2, while the 'economic outlook, next 5 years' sub-index dipped by 7.9 percent, landing at 95.9.
In contrast, the 'family finances vs. a year ago' sub-index rose by 6.9 percent, achieving a value of 84.2. Although pessimism persists, the gap between pessimists and optimists has narrowed to its closest since early 2022.
The 'family finances, next 12 months' sub-index remained above 100, at 103.2, suggesting that optimists still outnumber pessimists. However, this figure represents a slight decline of 0.9 percent from the previous month.
There was a notable enhancement in the 'time to buy a major household item' sub-index, which increased by 4.8 percent to 89.2, marking a two-and-a-half year peak.
Despite this positive shift, concerns about the broader economic outlook have influenced job sentiment. The Westpac-Melbourne Institute Unemployment Expectations Index climbed by 2.7 percent to 123.7 in December.
Conversely, the 'time to buy a dwelling' index decreased by 6 percent to 81.6, reflecting heightened uncertainty regarding the housing market.
Furthermore, the Westpac-Melbourne Institute Index of House Price Expectations declined by 5.3 percent, reaching 142 in December—the lowest level since April 2023.
Looking ahead, the Reserve Bank Board is scheduled to convene on February 17 and 18. According to Westpac economist Matthew Hassan, the board will likely require more tangible evidence of decelerating inflation before considering a policy relaxation.
Westpac anticipates that the Board will maintain the current interest rates at its February meeting, with an easing possibly beginning in May.
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