Massive job cuts by Qantas and car manufacturers shutting up shop have helped pushed consumer confidence to its lowest level in 10 months.
The Westpac/Melbourne Institute index of consumer sentiment fell to 99.5 in March, from 100.2 in February, seasonally adjusted.
A reading below 100 points indicates there are more pessimists than optimists about the state of the economy.
Westpac senior economist Matthew Hassan said layoffs by some of Australia’s biggest employers have hurt consumer confidence.
“The run of bad news around the motor vehicle industry, other manufacturers and Qantas has clearly rattled consumers,” he said.
“Additional questions surveyed this month on news recall found over two thirds of consumers heard news on economic conditions with most viewing the news as negative.”
The survey’s unemployment expectations index rose 5.5 per cent in the month to 164.4, its highest level since the global financial crisis.
Mr Hassan said the reading shows that more consumers expect unemployment to rise in the year ahead.
“The surge in the index reflects a severe loss of confidence around job security that can be expected to impact consumers’ financial decisions,” he said.
Mr Hassan said Westpac expects two more cash rate cuts by the Reserve Bank of Australia (RBA) in the second half of 2014.
The RBA next meets on April 1, and governor Glenn Stevens has indicated recently that the cash rate won’t be changed in the coming months.
JP Morgan economist Tom Kennedy said job security is becoming a larger concern for Australians and is weighing on consumer confidence.
“The weakness in the past few months appears to be related to growing concerns around the performance of the economy over the next year and the potential for the unemployment rate to rise further,” he said.
“An anticipated slowdown in the economy, expected rise in the jobless rate and the realisation that additional rate cuts may not be forthcoming in 2014 have unsurprisingly taken their toll on the outlook for family finances in the year ahead.”
The Westpac survey was conducted between March 3 and March 8.