Consumer confidence has slipped for the second straight month to its lowest level since July, as concerns about unemployment weighed and cheer over rises in house prices faded.
The gains made after the September federal election last year were shed, with the Westpac–Melbourne Institute Index of Consumer Sentiment falling 1.7 per cent to 103.3 points.
The result came despite the usual boost in sentiment during the festive season, Westpac chief economist Bill Evans said.
Mr Evans said the loss of 22,600 jobs reported in the Bureau of Statistics December labour force report hit confidence.
“There is also some evidence of a cooling in optimism around housing and house prices,” Mr Evans said.
Traders broadly looked through the report, with the Australian dollar remaining around US88.11¢, the day’s high so far.
The survey’s unemployment sub-index edged up by 0.7 per cent this month, after a 4.6 per cent rise in December, reflecting expectations of a rise in unemployment this year.
“The index shows no signs that respondents are feeling any relief for job prospects despite the Reserve Bank’s rate cuts and the recent fall in the Australian dollar,” Mr Evans said.
“In January, the index is 3.5 per cent above its average level in 2013.”
Mr Evans, who tips the RBA to cut the cash rate by 50 basis points this year, said the central bank was unlikely to cut interest rates at its board meeting in February amid an improving global economy and signs that housing activity in Australia was responding to the low rates environment.
“Evidence from this survey that households are losing a little confidence; the labour market remains very difficult; and the confidence boost around housing may be peaking is all consistent with the eventual need for further relief,” Mr Evans said.
“But, for now, rates are likely to be on hold for some months.”