Sentiment among Australia’s consumers has fallen to its lowest level in 18 months and pessimists now outnumber optimists, according to a monthly survey.
The Westpac-Melbourne Institute Index of Consumer Sentiment fell 4.8 per cent to 98.8 in March from 103.8 in February, slipping below the 100-point mark that separates optimism from pessimism.
Westpac senior economist Matthew Hassan said sentiment deteriorated after the release of GDP data that showed the Australian economy was growing more slowly than expected by the Reserve Bank, cutting down a short-lived bounce in optimism recorded in the previous month.
Consumers’ expectations for the economy over the next year dropped 6.9 per cent in March, cancelling a 7.0 per cent gain in February and following on from a 7.8 per cent drop in January.
There was an increase in the number of respondents saying savings should be used to pay off debt, with 26.3 per cent calling it the wisest option for excess funds – a 4.6 percentage point move over 12 months – while 28.8 per cent opted for placing it in a bank.
Only 8.8 per cent favoured investing in real estate – the lowest level since the Westpac-MI survey started in 1974.
“Consumers in Sydney, which has seen the largest house price declines over the last 18 months, recorded a sharp 10 per cent fall in sentiment,” Mr Hassan said, adding that a 14 per cent decline among labourers or operators likely reflected a weakening pace in dwelling construction.
The survey results also suggested a sharp rise in concern about job losses in the year ahead, with the unemployment expectations index recording an 8.9 per cent increase in March.
The Australian dollar dropped about a third of a per cent against the US dollar around the time of the survey’s release and, at 1220 AEDT, was worth 70.64 US cents.