Bill Evans re the Institute of Consumer Sentiment Index plunging to 5.7% in December 2014

Fall in consumer sentiment “disturbing”: Westpac The Westpac-Melbourne Institute Consumer Sentiment Index plunged 5.7% in December – its lowest level since August 2011. The Index is now sitting on 91.1, down from 96.6 in November. Westpac chief economist Bill Evans describes the result as “very disturbing”. Evans says respondents are clearly concerned about the outlook for the economy and job security, with disillusions about the May Budget. Respondents’ most recalled news topics - ‘economic conditions’ (59.2% of respondents); ‘budget and taxation’ (52.7%); ‘international conditions’ (26.3%) and ‘employment’ (19.5%) – were assessed to be unfavorable for each of these categories. Only one sub-index improved in December – ‘family finances vs a year ago’ was up by 1.6% – however falls were recorded for ‘family finances next 12 months’ (down 4%), ‘economic conditions next 12 months’ (down 9.7%) and ‘economic conditions next five years’ (down 1.8%). Evans highlights a “major collapse” in the sub-index tracking assessments of ‘time to buy a household item’, which plunged by 11.8%. “It is now 21.4% below its level of a year ago and has reached its lowest level since April 2009. This is a particularly awkward time for respondents to feel so downbeat about purchasing major items given that it comes in the critical lead up weeks to Christmas. That said, the decline may well be a reaction to recent sharp falls in the Australian dollar and the impact this is expected to have on the cost of imported goods.” Anxiety around the labour market is also adding to respondents’ skittishness, with the unemployment index increasing by 4.4%. “Apart from one higher print in March this year, this is the highest read since June 2009 when respondents were still traumatised by the Global Financial Crisis,” Evans says. On the housing market, respondents were also increasingly gloomy: the ‘time to buy a dwelling’ index fell 10.8%, while the house price expectations index was down 8.3%. “Despite this clear shift, expectations are still positive overall, implying more consumers expect house prices to rise than fall, and the Index is above its low in June this year and well above readings in 2011-12,” Evans notes. The RBA’s next Board meeting is in February, and in news that bodes well for consumers, Westpac has revised its previous forecast of an interest rate rise in August 2015, to now predicting a 0.25% rate cut in February and a further 0.25% cut in March. “The messages from this survey are certainly consistent with the assessment that the Australian economy needs even lower rates. Overall confidence is weak. Respondents have sharply lowered their assessments of the economic outlook and their spending intentions. They remain extremely nervous about job security while adopting a more cautious attitude towards both their finances and the outlook for housing,” Evans says. “While this survey may prove to be an overreaction to the sobering news from the national accounts and ongoing concern around the Commonwealth Budget, it appears that the messages around spending, the labour market and housing are clearly signalling the need for a further boost in the form of lower interest rates.” Published on: Friday, December 12, 2014 http://www.yellowpages.com.au/qld/aspley/lj-gilland-real-estate-pty-ltd-14091356-listing.html Best Regards Linda & Carlos Debello “Your Local Property Management Specialist” LJ Gilland Real Estate Pty Ltd (http://www.ljgrealestate.com.au) PO BOX 19 ZILLMERE 4034 (07) 3263 6085 0400 833 800 (Mob 1) 0413 560 808 (Mob 2) 0409 995 578 (Linda) http://www.ljgrealestate.com.au/index.php?lan=ch cid:image003.jpg@01CF2CA2.DFE562B0 Confidential email:- The information in this message is intended for the recipient name on this email. If you are not the recipient please do not read, copy distribute or act upon the message as the information it contains may be privileged. If you have received this message in error, please notify the writer by return email. Thank you very much for your assistance in this matter and your co-operation