Australia’s Consumer Confidence Declines for Tenth Consecutive Month in August

Australia’s Westbank Corp., in a survey of 1,200 respondents released on Tuesday (8-9-22), reveals that Australia’s consumer sentiment continues to fall as surging inflation and interest rates increase, coupled with declining home values all weigh on the outlook for householders.

The index dropped 3% to 81.2% in August, meaning pessimists easily exceed optimists. The index has declined every month since November for a cumulative drop of almost 23%, bringing it to levels reached during the Covid pandemic and 2008-09 global financial crisis.

Australia, like many other countries in the developed world, is precipitously tightening its monetary policy as the government tries to contain inflation fueled by massive stimulus during the COVID-19 pandemic and supply chain disruptions. The price shocks have been aggravated by Russia’s invasion of Ukraine, which in turn sent energy costs soaring, and China’s frequent lockdowns used to try to contain the coronavirus outbreak.

Australian consumers’ assessment of the economic outlook over the next 12 months deteriorated further, with the sub-index “time to buy a major household item” dropping 8.4%.

Surprisingly, confidence in the labor market remains solid, with a lower share of respondents expecting unemployment will rise from the current 48-year low of 3.5%.