In what Westpac bank has called a “surprising result”, consumer sentiment levels have fallen over March and April by 5.1 per cent.
According to the Westpac Melbourne Institute Index of Consumer Sentiment, the rate fell from 110.5 in March to 104.9 this April after seeing a rise of around 9.9 per cent over the previous two months.
“Reasons for the April fall are probably best assumed to be around global concerns and an associated correction in the share market,” stated Westpac chief economist Bill Evans.
“While it was reasonable to expect the recent momentum in the Index over the last two months to have slowed in April, a 5.1 per cent fall was not expected.”
However, an improving job market will help future rates of consumer confidence – with a gain of around 71,500 jobs reported in February this year.
There has also been a lot of speculation that the next cash rate decision by the Reserve Bank of Australia will result in an increase, meaning a possible reduction in household affordability.
“This result emphasises how fragile consumer confidence has become in the current environment,” said Mr Evans.
Commenting on the statistics, Australian National Retailers Association (ANRA) chief executive Margy Osmond stated that it doesn’t take much to scare Australian consumers into saving their money instead of spending.
“There have been a number of ‘monsters under the bed’ scenarios – like the prospect of increased interest rates and the concerns about Cyprus’ economy – that have worried shoppers,” said Ms Osmond.
While this is not the most positive of news, it highlights the need for retailers in Australia to have a good retail strategy in place to ensure that they are keeping up levels of sales and are still generating business.