Westpac survey says consumer confidence higher in February but households still cautious
Shoppers are more likely to hit the stores in February, according to the latest Westpac-Melbourne Institute consumer confidence survey released on Wednesday.
The new survey showed a rise of 1.9 percent in consumer confidence for the month, coming from the decline of 5.7 percent in January that Westpac said was largely caused by the damages inflicted by the Queensland floods.
Westpac chief economist Bill Evans said that the recovery signalled this month bodes well for the retail industry following the disappointments seen in the previous month as he noted that "the survey in January was conducted over the week when the floods in Brisbane and regional Queensland dominated the news."
He added that most economists would not expect any positive indicators coming from January and "we assessed that much of the fall in confidence last month was in response to the floods."
Evans said that the February confidence indicator for shopping behaviour is indeed encouraging but he stressed that it would have been a lot better if not for the additional devastations delivered by cyclone Yasi.
He said that considering the prevalence of some steady numbers, "I would have expected something a little stronger than that, particularly given that the unemployment rate was down to 5 per cent and that interest rates weren't changed."
Evans reminded that while a turnaround is being felt in the month, its progress would be somewhat tempered by the long-term effects of Yasi.
At any rate, the new Westpac survey points to suggestions that consumers are being lured back by attractive discounting offered by retailers as Evans pointed out that "households are responding to the sharp falls in prices of these goods as record high levels of the Australian dollar combine with soft demand."
Still, most consumers are cautiously optimistic of the general situation and while the existence of better prices are indeed inviting, Evans said that for now households are mostly embracing the thought that "it may be a good time to buy but due to caution surrounding the economic outlook, prospects for their finances and uncomfortably high debt, they are not buying despite attractive prices."