Following the release of Australia’s Westpac Consumer Confidence data for January, -1.8% versus -0.8% expected, analysts at the institutional bank cites bushfires as the main culprit behind the sustained weakness in the consumer sentiment.
Key quotes
It is entirely reasonable to have expected that the Index would have fallen during this period of devastating bushfires. Perhaps it is somewhat surprising that the fall in the Index was not more severe particularly in light of the 5.8% fall we saw during the Queensland floods in 2011.
Confidence has been further eroded by the bushfires but because the Index was starting from such a modest level it was likely that the fall in Confidence would be less than some may have expected.
This low level of Confidence is consistent with the generally lackluster reports on consumer spending. The surprising jump in retail sales which was reported for November is likely to have largely reflected the “Black Friday” effect.
A more widespread boost to spending will be required before there are credible grounds to dispute the downbeat signals associated with the consistently low levels of the Index.
All the economic components of the Index recorded declines in January.
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