"We suspect the run of 'bad news' around the motor vehicle industry, other manufacturers and Qantas may have rattled consumers. There may also be heightened concerns about what lies ahead with the May Budget."
- Bill Evans, Westpac economist
Consumer sentiment in Australia continued to fall as households are concerned about the economic prospects and rising interest rates. According to a Westpac survey, Australians were less optimistic about their finance and the economic outlook in February, underlying challenges the nation's economy might face as it recovers from the post mining-boom trough. The Westpac-Melbourne Institute Index of Consumer Sentiment declined 3% to 100.2 in February compared to 103.3 seen in the previous month, marking the third consecutive month of decline. The index, however, stayed above the 100 threshold, indicating net optimism among Australians.
Expectations on Australia's economy were particularly weak this month, with the sub-index assessing consumers' expectations over the coming 12 months at the lowest level since march 2012. Also, 57% of respondents expected higher interest rates over the next 12 months, compared to 39% when surveyed in August, in light of the Reserve Bank of Australia's intention to end the easing cycle, which has lasted two years, underlying that a period of stable interest rates is necessary.
© Dukascopy Bank SA