Australian consumer sentiment slipped back into negative territory in September, with households increasingly worried about the economic outlook despite signs of improving family finances, according to the latest Westpac–Melbourne Institute survey.
The Consumer Sentiment Index fell 3.1% to 95.4, reversing August’s modest lift to 98.5 and returning to what Westpac described as “cautiously pessimistic” levels.
Matthew Hassan, Head of Australian Macro-Forecasting at Westpac, noted: "Outright optimism remains elusive for Australian consumers.
"The cost-of-living crisis may be largely over and policy easing generating some uplift but there is still clearly some unease about the path ahead."
Concerns were most evident in expectations for the broader economy. The sub-index tracking the 12-month outlook dropped 8.9% to 92.2, while the five-year outlook fell 5.9% to 92.7, both moving decisively into pessimistic territory.
This shift weighed on household spending sentiment, with the ‘time to buy a major item’ measure slipping 3.4% to 98.2 after briefly edging into positive ground last month.
Family finances, however, showed further improvement. The ‘finances versus a year ago’ index rose 2.6% to 86.3, its best reading since early 2022, while the forward-looking ‘finances, next 12 months’ index edged up to 107.7, slightly above its long-run average.
That cautious optimism on household finances appeared to temper expectations for further monetary easing.
The Mortgage Rate Expectations Index climbed 5.2% to 88, from a 13-year low in July, with 69% of respondents expecting rates to be steady or lower in a year, down from 72% following last month’s rate cut.
Job market sentiment also weakened, with the Unemployment Expectations Index rising 4.6% to 131.4, in line with its long-run average and suggesting consumers expect stability rather than improvement in labour conditions.
Housing-related sentiment was mixed. The ‘time to buy a dwelling’ index slipped 1.7% to 96.1, though state-level results varied widely.
By contrast, house price expectations surged to a 15-year high of 168.4, with more than three-quarters of respondents predicting price rises over the next year.
Separately, NAB’s August business survey showed resilience in corporate sentiment.
Business confidence eased three points to +4 but remained close to its long-run average after four consecutive monthly gains.
Business conditions improved by two points to +7, supported by stronger profitability and employment.
NAB Chief Economist Sally Auld said: “The August survey result gives us confidence in our view that the outlook for businesses continues to improve. Both business confidence and conditions have normalised and are around their long-run averages.”
