"The modest fall in the Index is probably due to an expected retreat following the positive expectations around the election result"
-Bill Evans, Westpac's chief economist
Euphoria after elections begins to wane, while a steep decline in the stocks as well as uncertainty about U.S. possible default are weighing on Oz consumers. The Westpac Melbourne Institute said a measure of consumer sentiment eased from a 33-month high in October, hitting 108.3 this month, 2.1% lower from September, when index reached 110.6. Despite a drop reading still hovers above the 100 threshold which indicates optimism among consumers. Another worrying sing is a marked shift in attitudes towards whether Australian considering it is a good time to buy a home or not, with corresponding index inching lower 10.3% to 135.0.
In September the gauge of consumer sentiment was boosted by a win of Liberal-National coalition, putting an end to three years of slightly chaotic minority Labor government. The newly-appointed Prime Minister Tony Abbott already promised to install greater prospects for Oz economy, which is struggling from a downturn in the key mining sector. Amid main factors that weighed on consumers' sentiment are a steady fall in stocks through the week (2% fall), and a constant increase in Aussie. Furthermore, growing uncertainty surrounding the U.S. government shutdown is also a huge drag on Australians' mood. Meanwhile, the Australian Bureau of Statistics is likely to show that unemployment rate has stalled at 5.8%, and the fact more consumers expect situation in the labour market to deteriorate further was also reflected in the survey.
© Dukascopy Bank SA