The Westpac Melbourne Institute index of Consumer Sentiment shows consumer sentiment is failing to lift despite positive factors.
Westpac’s Chief Economist Bill Evans said the Index remains 2.7% below the level it was in November 2011, regardless of 150 basis points of rate cuts.
“Other factors which would normally have been expected to impact confidence have had little effect,” he said.
He addresses factors such as the Australian dollar rising to USD 1.046, an Australian share market rise of 4.1% and unemployment falling from 5.4% to 5.2%.
“Clearly these positive news events have failed to move respondents,” said Evans.
A key finding was that respondents had become more guarded around their own finances.
Assessments of family finances compared to a year ago were 8.6% down, and an outlook for the next 12 months fell by 1.2%.
Evans said “since the Reserve Bank started cutting rates, respondents’ assessments of their finances have improved by a miniscule 1%”.
Sentiments towards buying a house have gone up 11% to be around the highs of 2009 when house prices lifted nationally.
Evans discussed the case for a further rate cut in the February meeting as being “reasonable”, but is waiting for prints for employment and inflation over the next week.
He said they have opted for the next cut in the March end of their forecast window.