Shifting Tides: Diverging Paths for Consumers and Businesses in Australia

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

New Low-Interest Loans to Accelerate Electric Vehicle Adoption

21 Feb 2026: Paige Estritori

In a significant move to promote the adoption of electric vehicles (EVs) among Australian consumers, the federal government has announced a new loan scheme designed to make EVs more accessible and affordable. This initiative aims to reduce the financial barriers associated with purchasing electric cars, thereby encouraging a shift towards more sustainable transportation options. - read more

Decline in Australia's Used Car Market: Sales and Listings Down

21 Feb 2026: Paige Estritori

The Australian Automotive Dealer Association (AADA), in collaboration with AutoGrab, has released the November 2025 Automotive Insights Report (AIR), revealing a significant downturn in the used car market as the year concludes. - read more

New Partnership Aims to Reduce Electric Vehicle Costs for Australians

13 Feb 2026: Paige Estritori

In a significant move towards promoting sustainable transportation, the Clean Energy Finance Corporation (CEFC) has committed up to $60 million in partnership with Hyundai Capital Australia (HCAU) to make electric vehicles (EVs) more affordable for Australian consumers. - read more

Australians Embrace Hybrid Vehicles Amid Rising Environmental Awareness

13 Feb 2026: Paige Estritori

The Australian automotive market is witnessing a significant shift as consumers increasingly opt for hybrid vehicles, balancing practicality with environmental consciousness. Recent data from the Australian Automotive Dealer Association (AADA) and AutoGrab reveals that used hybrid car sales have more than doubled over the past two years, escalating from 6,868 units in October 2023 to 14,784 in October 2025. - read more

Australian Used Car Market Ends 2025 on a Softer Note

05 Feb 2026: Paige Estritori

The Australian Automotive Dealer Association (AADA), in collaboration with AutoGrab, has released the December 2025 Automotive Insights Report (AIR), revealing a significant downturn in the used car market as the year concluded. - read more

Plug-In Hybrid Vehicles Gain Momentum as Petrol Car Sales Decline in Australia

05 Feb 2026: Paige Estritori

The Australian automotive market is witnessing a significant shift in consumer preferences, with plug-in hybrid vehicles (PHEVs) experiencing a remarkable surge in sales, while traditional petrol vehicle sales continue to decline. - read more

Macquarie Bank Transfers $1.5 Billion Car Loan Portfolio to Allied Credit

28 Jan 2026: Paige Estritori

In a significant move within the Australian financial sector, Macquarie Bank has agreed to sell a $1.5 billion portfolio of car loans to Allied Credit, a leading independent financier in Australia. This portfolio encompasses over 50,000 car loans and is slated for transfer by the fourth quarter of 2025. - read more

Click for more Finance News