- Bill Evans, chief economist at Westpac
Consumers have been losing their confidence, as they became more worried about the economic and employment outlook amid renewed concerns about the federal budget. The Westpac Melbourne Institute Index of Consumer Sentiment, based on the survey of 1200 people, unexpectedly declined a seasonally adjusted 4.6% in September to 94 points, from the August jump of 3.8%, and is 5.8% below its pre-Budget levels. The index has remained below 100 points for the past six months, indicating there are more pessimists than optimists. When asked what news respondents most recalled, they mentioned the federal budget and taxation ahead of all other subjects. Economic conditions and unemployment followed, with the bunch of news being considered "unfavourable", as the jobless rate recorded a shock rise to 6.4% in July from 6%. Thus, the index for economic conditions over the next 12 months fell down 8.4%, while that for conditions over the next five years dropped 9.2%. While the resource-rich economy is not doing badly by OECD standards, a sharp decline in mining-sector investment in recent years has heavily impacted growth and jobs. The Aussie plunged to a five-month low versus the U.S. Dollar, initially affected by the consumer confidence data, but soon hit by growing strength in the Greenback. The Australian dollar was down 0.66% against the U.S. Dollar at $0.9141 immediately after the data release, touching the lowest it has traded since March 26.
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