Decreased Consumer Sentiment could have repercussions for Housing Market
While overall consumer sentiment has recorded a significant uplift since late 2011, the latest figures over the last two months are showing some worrying trend signs.
Consumer confidence has recorded a fall of -7% for May, following a drop of -5.1% in April.
The latest figures puts the consumer sentiment index at 97.6 points - its lowest level since August 2012 - and reflects higher levels of pessimism than optimism.
According to RP Data’s senior research analyst, Cameron Kusher, the recent data reveals monthly volatility, with May’s drop in consumer sentiment widely reported to have been affected by the federal government’s recent budget announcement.
However, the six month average sentiment measures 103.7 points, which is just slightly more optimistic than pessimistic. Kusher pointed out that the latest index reading indicated that consumer sentiment remains fragile, and that the figures could foreshadow a slowdown in retail spending and housing activity.
The current low consumer sentiment suggested that people will be looking for more confidence in the economy before buying a home so that they can service debt levels, Kusher pointed out.