Consumer confidence down modestly: Westpac
The Westpac–Melbourne Institute Index of Consumer Sentiment fell by 3.8% in December.
The drop from 118.3 in November to 113.8 in December was described as a "modest fall" by the bank's Chief Economist, Bill Evans. It came on the back of the third rate rise in as many months and Westpac's controversial decision to increase its housing rate by double the Reserve Bank's official interest rate rise.
Published this week (December 9), the WMI index shows that mortgage holders were more strongly impacted in terms of consumer sentiment than those unburdened by housing loans.
"A closer inspection of the components of the Index shows that those folks holding a mortgage have responded much more negatively to the rate increases than those who are not holding a mortgage. Confidence amongst those with a mortgage fell by 8.9% while Confidence of those who are renting actually increased by 1.6% while those wholly owning their homes registered a fall of 4.1%," Evans said.
A rising share market and good news on the employment front positively impacted consumers, Westpac said. Supporting this view was the "News Heard Index" which, Westpac says, showed that more households recalled news on the state of the economy than on interest rates...
"The interest rate increases clearly affected sentiment towards housing with the "Time to Buy a Dwelling" Index down by a relatively modest 12.3% since September, said the report. However November saw the index increased by 2.5% over the month.
The bank contends that "for households it appears that optimism about house prices may be offsetting any concerns about interest rates."
The WMI survey is based on 1200 adults selected at random across Australia and was conducted in the week from Nov 30 to Dec 6, 2009.
