-Bill Evans, Westpac Chief Economist
Australian consumers began to feel slightly more optimistic in October about the economic outlook and their finances; however, the number of pessimists outweighs those who feel upbeat amid Australia's weak economic performance. The Westpac-Melbourne Institute Consumer Sentiment index rose 0.9% to 94.8 in October from 94.0 in the previous month, with a figure above 100 indicating that optimistic consumers outweigh those that are pessimistic. The index has been staying below the 100-mark threshold for eight consecutive months. Households appeared to be most concerned about the near-term outlook for the nation's economy, with the corresponding sub-index measuring one-year outlook declining 5.2% to 82.0 in October. However, the five-year outlook was much more positive, with the sub-index rising 5.5%, indicating that consumers are optimistic the economic downturn will be overcome.
Loss of confidence among consumers comes on the back of bumpy economic path in Australia, as dramatically falling mining-sector activity causes economic languor. Weaker growth has pushed jobless rate to levels last recorded during the peak of the global financial crisis, creating a sense of cautiousness among consumers. Retail sales, a proxy of consumer activity, inched higher modestly 0.1% in August on month, after a 0.4% rise a month earlier, highlighting consumers' reluctance to spend.
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