Latest news with #MatthewHassan
Reuters
4 hours ago
- Business
- Reuters
Australian consumers give muted cheer to lower interest rates
SYDNEY, June 10 (Reuters) - A measure of Australian consumer sentiment inched higher in June as a cut in interest rates gave only a limited lift to finances and the economic outlook, though there was a pick up in buying intentions. A Westpac-Melbourne Institute survey showed on Tuesday its main index of consumer sentiment edged up 0.5% in June, following a 2.2% rise in May. The index was 10.8% higher than a year earlier at 92.6, though being below 100, that meant pessimists still outnumbered optimists. The Reserve Bank of Australia cut interest rates by a quarter point to 3.85% in mid-May and sounded open to further easing should inflation continue to slow as expected. Data out last week underlined the need for stimulus as the economy barely grew in the first quarter as households chose to save more rather than spend, while the government cut back spending after a long run of increases. "On the positive side, the RBA's May interest rate cut and moderating inflation are providing significant boosts, particularly around buyer attitudes towards major purchases," said Matthew Hassan, Westpac's head of Australian macro-forecasting. "But against this, more sluggish growth reads domestically and the unsettled situation around global trade are continuing to weigh heavily on expectations." The survey found respondents were cautious about their personal finances for the year ahead, with the index falling 1.9%, while the economic outlook for the next 12 months slipped 2.4%. The one bright spot was the index on whether it was a good time to buy a major household item which climbed 7.5%, leaving it almost 26% higher than a year earlier.
The Age
4 days ago
- Business
- The Age
Reserve Bank could deliver shoppers plenty of pre-Christmas cheer
The turnaround in market expectations on future rate cuts was driven in part by the Reserve Bank's most recent board minutes, which showed at its May meeting it seriously considered a half percentage point rate reduction, and the soggy national accounts for the March quarter. Loading The economy expanded by a less-than-expected 0.2 per cent through the first three months. Household spending, which accounts for half of all economic activity, increased by 0.4 per cent through the quarter. But those figures confirmed the struggle facing many consumers, especially those facing higher mortgage repayments. Over the past 12 months, consumer spending has increased by just 0.7 per cent. Spending on clothing and footwear grew the fastest, up by 3.2 per cent, closely followed by insurance and financial services, growing by 3.1 per cent. However, consumers spent twice as much on insurance and financial services, at $26 billion, in the March quarter than on clothing. Households sliced spending on new cars and driving those vehicles, expenditure on food grew by just 0.4 per cent, while eating out at restaurants or takeaways lifted by a modest 0.3 per cent. AMP deputy chief economist Diana Mousina said the figures, on top of the general economic outlook, meant the Reserve Bank would have to consider more rate relief. 'This gloomy growth outlook argues for more interest rate relief from the RBA, as the economy is travelling slower than expected. We had been expecting another 0.25 percentage point rate cut at the August, November and February board meetings, but now expect another 0.25 percentage point cut in July,' she said. One concern about further interest rate cuts is that they may drive up property prices in a country with some of the least affordable housing in the developed world. But Westpac's head of Australian macro-forecasting, Matthew Hassan, said existing high prices would prove an ongoing headwind for the market. He said the February and May rate cuts, on top of expected further rate relief, were providing some impetus to prices. 'However, the reaction remains measured to date, consistent with our view that the nature of the easing and the high starting point for prices would see a fairly muted affordability-constrained response,' he said. 'All up, where a lift is evident, markets appear to be tracking a slow, shallow turn. That may change. We are wary of housing's famous interest rate sensitivity. There is also evidence of substantial 'pent-up' or delayed activity.' Not everyone is convinced the bank will deliver another cut in July. ANZ's head of Australian economics, Adam Boyton, noted that the national accounts showed household finances were now improving rapidly, which meant the RBA could hold fire on further interest rate relief. Loading 'Household incomes are now showing robust growth, with the level of real income having returned to the pre-COVID trend. Given the strength in income growth, we don't think it will take much more on the interest rate front to make households confident enough to spend more,' he said. TD Securities, which had expected just a single rate cut this year in August, now thinks the RBA will move again in November.
Sydney Morning Herald
4 days ago
- Business
- Sydney Morning Herald
Reserve Bank could deliver shoppers plenty of pre-Christmas cheer
The turnaround in market expectations on future rate cuts was driven in part by the Reserve Bank's most recent board minutes, which showed at its May meeting it seriously considered a half percentage point rate reduction, and the soggy national accounts for the March quarter. Loading The economy expanded by a less-than-expected 0.2 per cent through the first three months. Household spending, which accounts for half of all economic activity, increased by 0.4 per cent through the quarter. But those figures confirmed the struggle facing many consumers, especially those facing higher mortgage repayments. Over the past 12 months, consumer spending has increased by just 0.7 per cent. Spending on clothing and footwear grew the fastest, up by 3.2 per cent, closely followed by insurance and financial services, growing by 3.1 per cent. However, consumers spent twice as much on insurance and financial services, at $26 billion, in the March quarter than on clothing. Households sliced spending on new cars and driving those vehicles, expenditure on food grew by just 0.4 per cent, while eating out at restaurants or takeaways lifted by a modest 0.3 per cent. AMP deputy chief economist Diana Mousina said the figures, on top of the general economic outlook, meant the Reserve Bank would have to consider more rate relief. 'This gloomy growth outlook argues for more interest rate relief from the RBA, as the economy is travelling slower than expected. We had been expecting another 0.25 percentage point rate cut at the August, November and February board meetings, but now expect another 0.25 percentage point cut in July,' she said. One concern about further interest rate cuts is that they may drive up property prices in a country with some of the least affordable housing in the developed world. But Westpac's head of Australian macro-forecasting, Matthew Hassan, said existing high prices would prove an ongoing headwind for the market. He said the February and May rate cuts, on top of expected further rate relief, were providing some impetus to prices. 'However, the reaction remains measured to date, consistent with our view that the nature of the easing and the high starting point for prices would see a fairly muted affordability-constrained response,' he said. 'All up, where a lift is evident, markets appear to be tracking a slow, shallow turn. That may change. We are wary of housing's famous interest rate sensitivity. There is also evidence of substantial 'pent-up' or delayed activity.' Not everyone is convinced the bank will deliver another cut in July. ANZ's head of Australian economics, Adam Boyton, noted that the national accounts showed household finances were now improving rapidly, which meant the RBA could hold fire on further interest rate relief. Loading 'Household incomes are now showing robust growth, with the level of real income having returned to the pre-COVID trend. Given the strength in income growth, we don't think it will take much more on the interest rate front to make households confident enough to spend more,' he said. TD Securities, which had expected just a single rate cut this year in August, now thinks the RBA will move again in November.
West Australian
21-05-2025
- Business
- West Australian
Economic recovery ‘stalling': Westpac says rate cut is a lifeline for households
A Westpac survey of future growth prospects suggests the Reserve Bank's interest rate cut Tuesday will be much needed. The Westpac-Melbourne Leading Index, which forecasts the likely pace of economic activity three to nine months in the future, saw a dive in sentiment, dropping to 0.2 per cent from 0.5 per cent in March. According to the bank, the growth rate is now unchanged on six months ago, with five of the eight components of the index weakening in the past half year. 'The above-trend growth pulse that emerged at the start of the year has all but disappeared,.' Westpac's head of Australian macro-forecasting, Matthew Hassan said. The largest drop has been a fall in consumer expectations, which is consistent with Reserve Bank Governor Michele Bullock's assessment yesterday that households were yet to open their wallets despite a lift in wages and February's rate cut. 'We've been surprised consumption hasn't recovered as real incomes are starting to recover,' Ms Bullock said Tuesday. The Westpac index found the turmoil created by Donald Trump's 'Liberation Day' tariffs had knocked the Australian stock market and was starting to crimp the previously 'positive contributions' from commodity prices. The index also found that the impact of the tariff announcements was reducing US industrial production and having a negative effect on interest rates paid by businesses. Tuesday, the RBA revealed that it was modelling three separate scenarios as a result of US trade policy, the worst of which resulted in an all out tariff war that caused financial contagion and a hit to Chinese GDP of 4 per cent, a 3 per cent hit to Australian GDP and a rise in the unemployment rate to 6 per cent. 'Monetary policy is well placed to respond decisively to international developments,' the Bank said Tuesday. Following the announcement of a 90-day pause by the US administration and China, the prospect of an all out trade war had softened but the Reserve Bank has stilled shaved its forecast for Australian economic growth from 2.4 per cent to 2.1 per cent in December as a result of the global uncertainty.. Westpac sees growth dropping to 1.9 per cent by year end, 'a sub-par result by historical standards'. Mr Hassan, however, said the international picture was beginning to stabilise. 'It does not look too threatening at this stage, with most of the effect coming via sentiment and financial markets rather than a hit to trade and export prices,' he said. 'As such, we continue to expect the RBA to take a cautious, measured approach to policy easing with the meeting in early July likely to see policy left on hold.' With inflation safely back in the RBA's target band, Treasurer Jim Chalmers is seeing pressure to use the expanded mandate to grow the economy. He said the Government would not be distracted by the collapse of the Coalition, and said Labor is 'focused on the job at hand.' 'In our first term, the primary focus was on the cost of living, getting inflation down sustainably and we will continue to focus on that. 'This second term gives us an opportunity to lay down some of the longer term foundations for a more productive economy, in getting the energy transformation right, making sure that Australians have the skills to adapt and adopt technology, making sure we get the most out of our big investments in the care economy, making our economy more competitive and productive and dynamic,' Dr Chalmers said.
Reuters
13-05-2025
- Business
- Reuters
Australia consumer sentiment recovers partially from tariff blow
SYDNEY, May 13 (Reuters) - A measure of Australian consumer sentiment partially rebounded in May as the initial shock of U.S. President Donald Trump's tariff war faded a little, an improvement that should be underpinned by the latest truce with China. A Westpac-Melbourne Institute survey showed on Tuesday its main index of consumer sentiment bounced 2.2% in May, retracing some of the 6.0% dive suffered in April when Trump first announced his "reciprocal" tariffs. The index was 12% higher than a year earlier at 92.1, though that meant pessimists still outnumbered optimists. Matthew Hassan, Westpac's head of Australian macro-forecasting, said overall sentiment got a modest boost from the clear victory of the Labor government in a national election on May 3. Sentiment among Labor voters jumped 4.5% to a high 109.6, while confidence among supporters of the Liberal National opposition fell 0.7% to 85.5. The survey found respondents were more upbeat about their personal finances, which climbed 7.8%, while the economic outlook for the year ahead rose 2.8%. The index on whether it was a good time to buy a major household item also climbed 3.5%, leaving it almost 22% higher than a year earlier.
