Australia: Surprise Fall in Consumer Sentiment - Westpac
The Westpac Melbourne Institute Index of Consumer Sentiment fell by 4.0% in April from 99.1 in March to 95.1 in April.
Key Quotes via Bill Evans, Chief Economist at Westpac
"This is a disappointing result. After holding above 100 in the November–February period the Index has now been below 100 for two consecutive months. A print below 100 means that pessimists outnumber optimists. That had consistently been the case in the March 2014 – October 2015 period when the Index only exceeded the 100 level twice in 20 months. With four consecutive readings above 100 we were hopeful that confidence had moved on to a sustainable higher plain. Today’s result would appear to dash those hopes."
"It appears that international and market developments continue to create unease for respondents although the signals are mixed. The Australian sharemarket fell 3% over the month and media coverage on China continues to highlight risks. On the other hand the US sharemarket rose 2.4%. Specific sentiment towards housing fell sharply."
"A standout development over the month has been the solid rise in the AUD, up another 2¢ over the month, pushing over 77¢ US at one stage to a nine month high. Given that rebalancing of the economy towards service exports – tourism and education in particular – has been an important positive development over the last two years, respondents may now be interpreting any increase in the AUD as adverse for future growth."
"The Reserve Bank Board next meets on May 3. Despite this disappointing read on Sentiment we expect the Board will keep rates on hold for another month. We retain our call that rates will remain on hold for the remainder of 2016."