Slowing growth and increasing concern about the future are evident in new consumer confidence, housing and employment figures released today.
Worrying economic signs in the US and interest rate rises at home have undermined the confidence of Australian consumers.
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The Westpac–Melbourne Institute Index of Consumer Sentiment fell by 8.3% in January to 103.1 – just above the 100 point line separating negative and positive sentiment, and down from 112.5 in December.
Westpac chief economist Bill Evans says the decline in consumer sentiment is unsurprising given the interest rate rises of between 0.1% and 0.2% implemented by Australia’s banks in recent weeks, while higher petrol prices and a media focus on the US sub-prime woes contributed to the fall.
Consumers were most pessimistic when asked about the economic outlook over the next 12 months, but opinion on the state of respondents’ family finances now compared to a year ago was also negative.
The value of new mortgages in Australia increased by 0.5% in November seasonally adjusted, a 2% rise in owner occupier finance, more than offsetting a 2.8% fall in loans for investment property purchases.
The result is marginally below market expectations, although the strength of the owner-occupier segment is a welcome turnaround from previous trends.
The result will also be mildly worrying for the construction industry, with the proportion of loans taken out to build new houses down 7.3% as against finance for existing homes up 4.9%.
And the rate of new job creation is expected to slow to around 2% in February, according to the Manpower-Melbourne Institute employment report released yesterday. Jobs growth is expected to have been around 2.5% in December 2007, but that will slow to 2.3% this month and 2.1% next month, according to the report.