Shifting Tides: Diverging Paths for Consumers and Businesses in Australia

6

The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.

Westpac's latest consumer sentiment survey, released this Tuesday, indicates an escalating sense of pessimism among consumers. The bank's index, which reflects expectations for variable mortgage rates over the next twelve months, soared by 12.8% in July. This spike marks the highest monthly rise since the inception of the survey at the beginning of 2022.

"Consumer sentiment has remained entrenched in a deeply pessimistic zone for two years now," remarked Matthew Hassan, Senior Economist at Westpac.

Despite government incentives like the stage three tax cuts and fiscal support measures initiated from July 1, many households haven't experienced immediate financial relief due to banking payment cycles that often extend fortnightly or monthly. "Inflation pressures and the looming threat of more interest rate hikes continue to overshadow consumer sentiment," Hassan observed.

A staggering 60% of consumers anticipate a rise in mortgage rates over the next year. With the Reserve Bank's meeting on August 5-6 being deemed "live" for a potential interest rate hike to 4.6%, caution seems warranted. Added to this, the Reserve Bank of Australia (RBA) expressed concerns in its June meeting minutes that returning inflation to the target range of 2-3% might take longer than desired.

Family finances appear to be a primary source of consumer stress, with the corresponding sub-index plummeting by 8.4% in July, almost entirely reversing the previous month's 9.7% gain. This underscores the fragile state of household budgets.

In contrast, the same day also saw the release of National Australia Bank's (NAB) business confidence data, which painted a more optimistic picture. Business confidence rose last month, buoyed by a broad-based uptick across various industries, marking the highest level seen this year. However, business conditions continued on a downward trajectory, following a peak in late 2022.

NAB's head of Australian economics, Gareth Spence, noted a significant decline in the employment index during the month. "Though it's just one month's reading, the employment index dropping below its long-term average might indicate weakening labour demand paralleling a broader economic slowdown," Spence commented.

Other economic indicators delivered mixed signals. Forward orders dipped deeply into negative territory, mainly dragged down by the retail and wholesale sectors. Labour cost growth eased to 1.8% on a quarterly equivalent after May's 2.3%. On the other hand, purchase cost growth declined from 1.7% to 1.3%.

Despite these contractions, Spence highlighted a positive turn. "Encouragingly, key price and cost growth metrics have rolled back their increases from the previous month," he said. Retail price growth remained steady but notably high, notwithstanding the sluggish outlook and dented industry confidence.

Overall, these recent survey results portray a nuanced economic landscape. As articulated by Commonwealth Bank of Australia's Head of Australian Economics, Gareth Aird, the combined insights from Westpac, NAB, and job advertisement data from Seek depict an Australian economy gradually softening, with disparate impacts on consumers and businesses alike.

Published:Wednesday, 10th Jul 2024
Source: Paige Estritori

Please Note: If this information affects you, seek advice from a licensed professional.

Share this news item:

Finance News

Clear

ANZ Bank's $160 Million Fine Highlights Regulatory Compliance Failures

09 Nov 2025: Paige Estritori

In a landmark decision, ANZ Bank has agreed to pay a record-breaking A$240 million (approximately US$160 million) fine for a series of serious regulatory breaches. This penalty underscores the growing emphasis on compliance and accountability within Australia's financial sector. - read more

ASIC's Comprehensive Review of Australia's Motor Vehicle Finance Sector

01 Nov 2025: Paige Estritori

The Australian Securities and Investments Commission (ASIC) has commenced a thorough review of the motor vehicle finance sector, focusing on strengthening consumer protections and ensuring industry compliance with responsible lending obligations. This initiative aims to address potential risks and improve the experiences of borrowers across Australia. - read more

Australian EOFY Car Deals Hit Record Highs in 2025

01 Nov 2025: Paige Estritori

The 2025 End of Financial Year (EOFY) period witnessed an unprecedented surge in car deals across Australia, marking a significant milestone in the automotive industry. According to an analysis by TheBeep.com.au, the number of car deals in June 2025 reached 190, representing a 39% increase from the 137 deals recorded in 2024. This substantial growth underscores the intensified competition among automotive brands striving to clear stock before the June 30 deadline. - read more

EV and Hybrid Vehicle Financing in Australia Reaches $6.17 Billion in 2024

01 Nov 2025: Paige Estritori

The Australian automotive finance sector has experienced a remarkable surge in support for electric (EV) and hybrid vehicles, with financing volumes escalating from $250 million in early 2023 to an impressive $6.17 billion by the end of 2024. This substantial growth underscores the pivotal role of financial institutions in facilitating the nation's transition to low-emission transportation. - read more

Affordable Electric Vehicles: New Low-Interest Loans for Eligible Australians

24 Oct 2025: Paige Estritori

The Australian government has launched a new initiative to make electric vehicles (EVs) more accessible to a broader segment of the population. This program offers low-interest loans to individuals earning less than $100,000 annually, as well as essential workers, facilitating the purchase of new and used EVs priced up to $55,000. - read more

RBA Weighs Additional Rate Cuts Amid Economic Indicators

16 Oct 2025: Paige Estritori

The Reserve Bank of Australia (RBA) is currently evaluating the necessity of further interest rate cuts in light of recent economic developments. Following three reductions earlier this year, bringing the cash rate to 3.6%, the central bank is closely monitoring indicators such as consumer spending and inflation trends to inform its monetary policy decisions. - read more

Navigating Car Loan Approval Timelines in Australia

16 Oct 2025: Paige Estritori

Securing a car loan is a pivotal step for many Australians aiming to purchase a vehicle. Understanding the approval process and the time it takes can help set realistic expectations and facilitate a smoother experience. - read more

Click for more Finance News