Australians remain concerned about the national economy, despite a small monthly rise in consumer confidence.
The Westpac Melbourne Institute Index of Consumer Sentiment, released on Wednesday, showed a rise by one per cent to 99.2 per cent for October.
However, the survey has been below 100 – indicating more pessimistic than optimistic views about the economy – for eight months.
Westpac chief economist Bill Evans said the result was disappointing, especially in light of the Reserve Bank of Australia’s (RBA) interest rate cut last week.
“There were a number of reasons to have expected the Sentiment Index to have increased by more than only one per cent,” he said.
The RBA cut the cash rate by a quarter of a percentage point, to 3.25 per cent, last week, citing concerns about the outlook for the global and local economies.
It was the fifth time in 12 months the RBA had cut the cash rate but, Mr Evans said, consumer sentiment was weaker now than it was prior to the first rate cut of the current cycle, in November 2011.
He said a 3.9 per cent rise in Australian share prices during the past month and stimulus moves by the US and European central banks should also have provided a boost for sentiment.
Mr Evans said the strongest sub indexes covered by the survey were those that tracked family finances compared to a year ago (up 5.3 per cent on September) and family finances for the next 12 months (up 2.8 per cent).
The weakest sub-index were those that tracked economic conditions over the next 12 months (down 2.4 per cent from September) and the five-year economic outlook (down 4.6 per cent.)
Commonwealth Bank senior economist Michael Workman said Australians were also concerned about the international economic situation.
“EU debt issues are a continuing source of uncertainty for financial markets, which undermines consumer perceptions of their future financial well-being and security,” he said.
“As well, industry restructuring pressures, from a high Australian dollar and changed consumer spending trends, are significant influences on consumer insecurity about their employment.
“As a result, Australian consumers tend to be cautious and see the glass as half-empty rather than half-full.”
