The confidence of Australian consumers has improved by 5.4% since the second half of 2014. However, despite this rise, Australians are the most pessimistic of the 17 Asia Pacific economies surveyed.
Economist Saul Eslake noted that although economic growth had been slowing in most Asia Pacific economies over the past year, the slowdown in Australia had been more directly affecting household income and spending than in other Asian economies, where the slowdown had been concentrated in exports.
Mr Eslake said “the weakness in consumer confidence since 2012 was understandable given the current unemployment rate, and the slowing in wages and household income growth after the resources boom had passed its peak”. He said the “slight up-tick” in consumer confidence in this year’s survey was “most likely off the back of the current Federal Government’s second Budget – which was much better received than its first – and the two interest rate cuts in the first half of this year”.
“Australia has avoided following other resources-dependent economies such as Brazil and Canada into recession, which reflects Australia’s more diverse trading relationships, the effects of the Reserve Bank’s interest rate reductions and the more recent large fall in the value of the Australian dollar”, Mr Eslake said.
“In particular, record low interest rates have helped drive record levels of new dwelling construction, while the fall in the Australian dollar has provided a substantial boost to Australia’s tourism industry – and each of these sectors employs more people than mining”.
“Nonetheless, the improvement shouldn’t be overstated; Australia remains the most pessimistic economy in the region. As long as economic growth remains weak we are unlikely to see a substantial improvement in consumer sentiment here.”
MasterCard Division President for Australasia, Mr Eddie Grobler, said it’s important to understand how closely household consumption expenditures follow consumer confidence. “There are direct parallels between rises and falls in spending levels and changes in consumer confidence*. This pattern doesn’t just reflect rises and falls in expenditure, but also the areas that are likely to see spending.
Mr Eslake said that the resilience of consumer confidence in other economies in the Asia Pacific region should mean that Australia will continue to see high levels of investment in the property sector, and more students and tourists from the region. He said: “While this might not offset the full impact of the fading of the mining boom, it means that impact is not as dire as it would otherwise have been. The Australian economy is still growing and that’s good news.”
For data, background and forecasts on the Australian Consumers: Search CardWeb.com’s CardFlash® Library of more than 58,000 archived articles; Access CardWeb.com’s CardData® for current and historical Performance, Portfolios, Profiles, etc. Visit RAM Research® (ramresearch.com) for quarterly and annual forecasts covering more than 150 metrics. [complimentary or deeply discounted access to CardWeb.com subscribers].
Additional database resources include CardWeb.com’s CardExecs® – comings & goings of payments movers & shakers; CardWeb.com’s CardWatch® – ears & eyes on marketing globally (57K items); and CardWeb.com’s CardPixes® – form & function of card design (7K items).