Daily Commentary BY THE CURVE TEAM –

Consumers Remain Downbeat

13th of February, 2020

Consumer concerns continue with little sign recent events are yet to have an impact on sentiment.

The latest monthly consumer sentiment survey showed that pessimists still outweigh optimists despite a slight improvement from the previous month. The headline index still sits below 100 in February despite a 2.3% improvement.

Perceptions on the short and long-run prospects for the economy were the main driver behind the improvement over the month. Westpac reported that confidence improved over the week of the survey. They suggest it could be due to the widespread rain that helped both with the fire and drought situations. The RBA’s panglossian update on the outlook may have also helped.

However, it is clear that there are still headwinds facing consumers, especially when it comes to their own financial situation. Consumer’s perceptions of both their financial situation against a year ago and for the year ahead both fell. This comes despite rate cuts and tax cuts supporting household incomes in the face of slow wage growth.

The sustained weakness in consumer sentiment does cast doubt over the RBA’s expectations around the outlook for consumption.

David Flanagan

Director - Interest Rate Markets