SYDNEY (Reuters) – Australian consumer sentiment slipped in August as a decision by the country’s central bank not to hike interest rates for a second month did little to soothe worries about the economic outlook.
The Westpac-Melbourne Institute index of consumer sentiment dipped 0.4% in August from July, when it bounced 2.7%. The index reading of 81.0 showed pessimists again outnumbered optimists, a level that used to be only associated with recessions.
A slowdown in consumer spending is one reason the Reserve Bank Australia (RBA) held rates steady at 4.1% last week, though it cautioned that it might yet have to hike further to bring inflation to heel.
“The survey detail pointed to little or no impact from the RBA’s decision to pause,” noted Westpac senior economist Matthew Hassan. “Responses showed no improvement over the course of survey week, sentiment instead declining 4.9% between those surveyed prior to the RBA decision and those surveyed after.”
Two thirds of respondents still expected rates to rise over the year ahead, pushing sentiment among mortgage holders down a sharp 7.2%.
The survey’s measure of economic conditions over the next 12 months dropped 4.0%, while the outlook for the next five years dipped 0.8%.
The mood was a little brighter on family finances, which rose 3.4%, while a measure of whether it was a good time to buy a major household item edged up 0.3%.
Consumers were much more downbeat on whether it was a good time to buy a house, but also bullish on prices as that index hit its highest for the year so far.
(Reporting by Wayne Cole. Editing by Sam Holmes)