Westpac Consumer Sentiment drops

The Westpac-Melbourne Institute Index of Consumer Sentiment declined by 1.7% to 98.2 in September from 100 in August.

The consumer mood has lapsed back into slight negative territory again with continued pressure on family finances and concerns about the near term outlook weighing on sentiment.

The September survey included additional questions on the tax offset payments. Amongst those that had received a payment, 29% planned to spend it all, and a further 16% planned to spend over half. The remainder (53%) planned to spend less than half including around 25% who planned to save the full payment.

Consumer assessments of their current and future finances deteriorated slightly due to concerns about the state of the economy; the international backdrop; and employment. Consumer attitudes towards spending dipped in September.

Spending on discretionary and big ticket durable items has been particularly weak over the last year. The ‘time to buy a dwelling’ index declined 2.9%, reversing most of last month’s gain. Interestingly, consumers’ longer term expectations for the economy have been both steadier and more positive. See the full report here.