Business confidence may have risen last month, according to the latest National Australia Bank survey, but the Westpac/Melbourne Institute survey says consumer confidence has weakened after remaining strong through the election campaign.
And figures from the Australian Bureau of Statistics yesterday show that car sales edged up in seasonally adjusted terms last month and are running at close to an annual rate of a million vehicles, which is very solid.
As well, jobs growth is strong, jobs ads solid, retail sales are going OK (thanks in part to strong spending on coffee, takeaways, restaurants and other food services), housing approvals are OK without being brilliant, and yet this latest survey says there has been a sudden loss of confidence.
The soaring dollar (a new post GFC high of 94.57 USc was touched yesterday), is seeing more Australians travel offshore (and fewer people arrive here for a stay, and those that do are spending less).
But it takes confidence to travel, buy cars, eat out and not save, or split your income between consumption and saving.
It’s an odd dichotomy in an economy that is still one of the strongest in the world and stronger than it was a year ago.
The latest survey from Westpac and the Melbourne Institute showed its index of consumer sentiment fell 5% in September to 113.2.
That retraced most of the August jump and left the index 5.1% lower than in September last year.
Westpac chief economist Bill Evans said in a statement the fall had come as a "mild surprise".
"While we were mindful of the high starting point for the index, we expected that the news over the month had been sufficiently positive to ensure a modest further increase."
The survey was taken last week when the Reserve Bank left interest rates unchanged at 4.5% for a fourth month and data showed unemployment dropping to 5.1% on a surge in full-time employment.
"In retracing to the July level, the index is signalling that while households are much more confident than they were in May, following the long sequence of rate hikes over the October-May period, consumers remain cautious," said Mr Evans.
The greatest weakness came in responses to questions on the economic outlook.
The index measuring expected economic conditions over the next 12 months fell by 7.2% and expected conditions over the next 5 years fell by 6.1%. The measure of family finances compared to a year ago eased 1.1% and expected finances over the next 12 months dropped 6.1%.
And yet car sales continue at high levels, and they are one of the biggest commitments anyone can make outside buying a house.
The ABS said that new motor vehicle sales in Australia rose 0.3% in August, seasonally adjusted, to 84,999 units, from a downwardly revised 84,739 units in July.
In the year to August, new motor vehicle sales rose 10.5%, which also confirms the continuing strength of demand.
