Consumers In Australia Lose Their Optimism

Market Asia Pacific, March 1, 2005

One of the measures Australians use to probe consumer sentiment is an index compiled from regular surveys by the Westpac-Melbourne Institute where the number 100 separates consumer optimism (above 100) from consumer pessimism (below 100).

The British Broadcasting Corporation (BBC) recently reported that in February 2005 the index fell below the demarcation.

Australian consumers have been spending for quite some time, supporting the growth of their economy and projecting a general feeling of prosperity.

Reuters recently reported from Sydney that Australia's central bank raised interest rates for the first time in over a year. The bank was concerned that a tight labor market and higher wage demands would put pressure on inflation. It was also concerned that some sectors of Australia's industrial sector were reaching output capacity. Industry has expanded in Australia for the past 14 years.

Australia has largely been spared the effects of the general global slowdown of the past few years. The economy also seems to have weathered a drought the BBC called "crippling". The decline in cons