Consumer sentiment hits 30 year low
Steadying interest rates have failed to make an impact on cost of living concerns
Steadying interest rates have failed to make an impact on cost of living concerns
Consumer sentiment is at lows not seen since the recession of the early 1990s according to data released today. The Westpac-Melbourne Institute Consumer Sentiment Index revealed the three-month pause in interest rates has failed to boost consumer confidence down a further 1.5 percent to 79.7.
The report, released by Westpac today, pointed to cost of living pressures and inflation as the major reason for continued caution in household spending.
“Persistent pessimism has continued despite easing fears of further interest rate rises,” Westpac chief economist Bill Evans said. “This has seen a clear lift in the confidence of mortgage holders, up 7.8 percent in the latest month. However, this gain was more than offset by a 6.1 percent fall in the confidence of renters and a 5.8 percent fall in the confidence of consumers that own their home outright.”
When surveyed, consumers pointed to inflation as their greatest concern, indicating that household budgets are continuing to feel the pinch of high fuel, food and services costs. This was followed by budget and taxation, economic conditions, interest rates and employment.
While the outlook for further interest rate rises looks generally positive for mortgage holders into 2024, consumers considered news on the economy more negatively than positively.
“The cost of living remains the key negative for confidence in this cycle,” Mr Evans said. “While the ‘threat’ of rising rates is expected to ease further, a sustained recovery in confidence will only emerge when households are much more comfortable with the cost of living.”
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The bank posted unaudited cash earnings for the quarter of A$1.7 billion, down 2% on the average of its prior two quarters
National Australia Bank said that higher credit impairments against business loans contributed to a small fall in its unaudited December quarter cash earnings.
NAB , which is Australia’s second-largest bank by market capitalization, on Wednesday posted unaudited cash earnings for its fiscal first quarter of 1.74 billion Australian dollars, equivalent to about US$1.11 billion.
That was down 2% on the average of its prior two fiscal quarters. NAB did not give a year-earlier comparison.
The lender said that revenue grew by 3% compared with the average of its prior two fiscal quarters. Underlying profit growth of 4% over the same period was offset by higher credit impairment charges and income tax expenses, it added.
NAB, which posted an unaudited quarterly statutory profit of A$1.70 billion, said the A$267 million credit impairment charge included A$152 million of individually assessed charges. Those were mainly against Australian businesses and unsecured retail portfolios, it said.
The individual charges were up by 54% compared with a year earlier. NAB said that it had not altered its economic assumptions and scenario weightings.
“The economic outlook is improving but cost of living and interest rate challenges persisted,” Chief Executive Andrew Irvine said. “While most customers are proving resilient, we have maintained prudent balance sheet settings.”
NAB said it had seen a small decline in net interest margin due to funding costs, lending competition and deposits, partially offset by the benefit of higher interest rates.
On Tuesday, the Reserve Bank of Australia cut the country’s cash rate for the first time since 2020 but warned against expecting subsequent near-term cuts.
NAB is still targeting full fiscal-year productivity savings of more than A$400 million, and for operating expenses to grow by less than 4.5%, Irvine said.
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