Consumer confidence has shown surprising resilience in March despite a steady stream of bad news on the economy and rising petrol prices.
Westpac’s Consumer Confidence index fell just 0.2% in March from 85.8 to 85.6, after tumbling 9.6% in February.
Westpac chief economist Bill Evans says the result is impressive given bad news about the economy and unemployment, rising petrol prices and the fact the Reserve Bank did not cut interest rates.
“Normally we would have expected a solid fall in the index given the stream of negative news.”
But there may have been a lag in consumer sentiment from a number of bits of good news in February, including an interest rate cut and the Government’s $42 billion stimulus package.
“It may be that the index is now finding a base,” Evans argues.
“It is now 2.3% below its average of the last six months, and 1.7% below its average of the last 12 months. The index has fallen by only 3.4% over the last year compared to a fall of 23% in the year to March 2008.”
But it’s worth remembering that consumer confidence remains at recession levels and has hardly budged since August 2008, despite the RBA cutting the official cash rate from 7.25% to 3.25%.
Consumers’ assessments of their finances compared to a year ago fell by 11.4% following the 10% fall in the sharemarket in the last month, and the outlook for economic conditions over the next 12 months was down by 1.2% after falling by 12.5% in February.
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