Consumer sentiment stalled in December: Westpac survey
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The news: The consumer mood has "improved materially" over the course of 2024 but remains pessimistic overall, with the year ending with renewed concerns about the country's economic outlook, according to the Westpac Melbourne Institute Consumer Sentiment Index.
The numbers: The index dipped 2% to 92.8 in December from 94.6 in November. A ‘neutral’ level is a reading of 100, meaning pessimists outnumbered optimists by over 7 percentage points.
The index is a composite measure based on five sub-indexes: two tracking current conditions and three tracking expectations. All of the weakening in December was in the forward-looking components.
The biggest pull-back was around expectations for the economy. The ‘economic outlook, next 12 months’ sub-index dropped 9.6% to 91.2, while the ‘economic outlook, next five years’ sub-index fell 7.9% to 95.9.
Both sub-indices unwound about half of the rally seen over the previous two months. The September quarter national accounts update, released on 4 December, showed a disappointing performance with annual GDP growth slowing to just 0.8% over the year to date, and private demand stalling flat over the last six months.
The context: Westpac's head of Australian macro-forecasting, Matthew Hassan, noted that consumers continue to report solid improvements in ‘current conditions’ — reflecting assessments of finances compared to a year ago and whether now is a good ‘time to buy a major household item’ — but the latest month has seen this more than offset by a loss of confidence around the outlook, particularly for the economy.
That likely reflects several factors, Hassan said, including a disappointing September quarter national accounts update, ongoing uncertainty around inflation and the potential for interest rate easing, and a more unsettled global backdrop.
