Consumer confidence has fallen to its lowest level in seven months as worries about the rising unemployment rate and the possibility of higher interest rates weigh on people’s moods.
The Westpac/Melbourne Institute index of consumer sentiment in February fell 3.0 per cent, from January, to 100.2 points, seasonally adjusted.
It stayed above 100 points, indicating optimists outweighed the number of pessimists but is at its weakest level since July last year.
Since February 2013, the index has fallen 7.5 per cent.
Westpac chief economist Bill Evans said the result was surprisingly weak.
“The theme from this survey appears to be that households are particularly worried about the future,” he said.
“Exuberance around house prices is starting to wane.
“Households are clearly more worried about interest rates as well.”
The Westpac survey showed that 57 per cent of respondents expect interest rates to rise over the next 12 months, compared to 39 per cent in the August survey.
The survey’s house price expectations index fell by 2.2 per cent in February.
Mr Evans said that households were also getting worried about the labour market.
The survey’s unemployment expectations index is 7.5 per cent up from a year ago and at its second highest point since July 2009.
“More consumers expect unemployment to rise in the year ahead,” Mr Evans said.
“The weakness in the labour market, particularly over the last six months, has been taking its toll on households’ confidence.”
The Westpac survey was conducted between February 3 and February 8.