Westpac – Melbourne Institute Consumer Sentiment Index

May 2009
Table 1: Consumer Sentiment Index
May May Apr May % change on % change on
2007 2008 2009 2009 Apr 2009 May 2008
Seasonally Adjusted* 123.9 89.8 92.7 88.8 -4.3 -1.1
Trend** 120.2 87.3 89.0 90.7 1.9 3.9
See footnote below for discussion on the seasonal adjustment process.

Consumer The Westpac – Melbourne Institute Consumer Sentiment Index fell by 4.3 per cent in May to 88.8
sentiment from 92.7 in April, reversing some of the positive gains made last month.
fell in May
Three of the five component indices fell in May (see Table 2) with a decrease of 13.6 per cent
…with recorded by the component index reflecting economic conditions next 5 years. Decreases of 7.3 per
decline in cent and 7.0 per cent were also recorded by the two component indices about family finances (for the
the next 12 months and vs a year ago). However, the component index reflecting good or bad time to buy
expectations major household items rose by 7.3 per cent. Overall, the current conditions index rose by 1.1 per
index cent, but the expectations index fell by 8.0 per cent.

Decreases in consumer sentiment were recorded in most groups disaggregated by demographic

characteristics (see Table 3).

This month’s survey was conducted in the week which includes the presentation of the Federal
Budget for 2009/10 as well as the projected government budget deficits over the next few years.
Interestingly, the sentiment of respondents who would vote for the ALP was up by 2.6 per cent while
the sentiment of respondents who would vote for the Coalition was down by 5.7 per cent.

Chart 2: Current Conditions Index minus

Chart 1: Consumer Sentiment Index Expectations Index***
Index Index
135 20
Optimists - pessimists +100

10
115

95
-10
SA Trend
75 -20
May-03 May-05 May-07 May-09 May-03 May-05 May-07 May-09

_________________________________________________________________________________________________________

* In June 2006 we moved to reporting seasonally unadjusted series after we conducted a series of tests on the data which indicated no statistical evidence
of seasonality. However, further research showed that the January monthly changes were, in general, significantly larger than the average monthly changes
for the rest of the year. Consequently, we have adopted a new methodology to filter the raw data for the regular large monthly movements in January. This
new filtered series is our new seasonally-adjusted (SA) CSI.
**Trend for the latest month is based on 2-month moving average while the rest are based on 3-month centred moving average.
***The difference between these two indices provides an indication of consumers’ perception of the state of the economy now and in the future. A
positive (negative) value implies that consumers view current conditions more (less) favorably compared to the future.

© 2009 The University of Melbourne, Melbourne Institute of Applied Economic and Social Research
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Table 2: Consumer Sentiment Index – component questions (SA)
May May Apr May % change on % change on
2007 2008 2009 2009 Apr 2009 May 2008
Family finances vs a year ago 99.1 76.9 82.0 76.3 -7.0 -0.8
Family finances next 12 months 124.1 100.0 110.6 102.5 -7.3 2.4
Economic conditions next 12 months 137.9 87.0 62.2 62.2 0.0 -28.6
Economic conditions next 5 years 112.8 97.7 101.6 87.8 -13.6 -10.1
Good or bad time to buy major h’hold items 145.8 87.2 107.4 115.2 7.3 32.1
Current Conditions Index* 122.5 82.0 94.7 95.7 1.1 16.7
Expectations Index** 124.9 94.9 91.4 84.1 -8.0 -11.4
Percentage who reported that they were optimistic minus the percentage who reported that they were pessimistic plus 100.
*Average of the two component indices that relate to current conditions.
**Average of the three component indices that relate to expected conditions.

Table 3: Consumer Sentiment Index – by demographic characteristics (SA)

May May Apr May % change on % change on
2007 2008 2009 2009 Apr 2009 May 2008

Gender Male 130.8 97.9 96.3 94.2 -2.2 -3.8

Female 117.3 82.1 89.3 83.4 -6.5 1.7
By age 18-24 126.3 112.3 96.4 96.5 0.1 -14.1
25-44 127.6 90.3 97.6 90.3 -7.4 0.1
Over 45 120.3 84.2 87.8 85.7 -2.4 1.8
By home ownership Tenant 128.4 96.6 99.2 92.6 -6.7 -4.1
Mortgagee 123.0 83.6 93.1 87.9 -5.7 5.2
Wholly owned 123.2 91.1 90.1 88.1 -2.3 -3.3
By Fed. voting intention Coalition 142.7 80.3 84.6 79.7 -5.7 -0.7
ALP 113.6 98.9 95.3 97.8 2.6 -1.1
By occupation Manager/prof. 135.3 86.4 97.1 87.1 -10.3 0.8
Paraprof./trades 121.7 108.3 93.2 96.7 3.7 -10.7
Sales/clerical 131.1 83.4 96.4 84.4 -12.4 1.3
Lab./operator 108.6 92.0 98.7 92.3 -6.5 0.3
Not working 116.0 88.0 87.1 87.5 0.4 -0.6
By household income p.a. Up to $20K 108.4 89.3 89.6 86.1 -3.9 -3.6
$20 to $40K 110.8 80.6 90.8 85.1 -6.3 5.5
$40 to $60K 127.1 91.3 87.5 93.6 7.0 2.5
Over $60K 132.6 92.2 96.3 90.1 -6.5 -2.3
By area Metropolitan 128.8 94.1 90.0 89.6 -0.4 -4.7
Non- Metro. 114.8 80.7 96.7 87.5 -9.4 8.5

© 2009 The University of Melbourne, Melbourne Institute of Applied Economic and Social Research
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 Chart 3: Changes in Consumer Sentiment and Chart 4a: Family Finances Last 12 Months
Retail Sales Growth*
Index
% Seasonal adjusted, centred 3 month % change, 1 120 120
moving average, 03/04 prices quarter lead
2.4 12

7
100 100
1.4
2

0.4 -3
80 80
-8
-0.6 Trend SA
Retail sales growth (LHS)
-13
Quarterly change in consumer sentiment (RHS)
60 60
-1.6 -18
May-03 May-05 May-07 May-09
Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09

Chart 4b: Family Finances Next 12 Months Chart 4c: Economic Conditions Next 12 Months
Index Index
140 140 140 140

120 120

120 120
100 100

80 80
100 100
60 Trend SA 60
Trend SA
40 40
80 80
May-03 May-05 May-07 May-09
May-03 May-05 May-07 May-09

Chart 4d: Economic Conditions Next 5 Years Chart 4e: Time to Buy Major Household Items
Index Index
140 140 160 160

140 140
120 120

120 120
100 100
100 100

80 80
80 80
Trend SA Trend SA

60 60 60 60
May-03 May-05 May-07 May-09 May-03 May-05 May-07 May-09

*Source: Original Retail Sales deflated by the Consumer Price Index - ABS Catalogue No. 8501.0, Retail Trade: Australia
and ABS Catalogue No. 6401.0, Consumer Price Index: Australia.

© 2009 The University of Melbourne, Melbourne Institute of Applied Economic and Social Research
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 Chart 5: Current Conditions Index Chart 6: Expectations Index
Index Index
140

Optimists - pessimists +100

Optimists - pessimists +100

130

120
110

100
90

SA Trend SA Trend
70 80
May-03 May-05 May-07 May-09 May-03 May-05 May-07 May-09

Chart 7a: Consumer Sentiment by Home Chart 7b: Consumer Sentiment by Income
Ownership (SA) Group (SA)
Index Index Index Index
140 140 140 140

120 120 120 120

100 100 100 100

80 80 80 80
Less than $20,000 $60,000+
Mortgage Home owner
60 60 60 60
May-03 May-05 May-07 May-09 May-03 May-05 May-07 May-09

Chart 7c: Consumer Sentiment Chart 7d: Consumer Sentiment by Voting

by Area (SA) Index Intention (SA) Index
Index Index 160 160
140 140

140 140
120 120

120 120
100 100
100 100

80 Metro 80
80 80
Non metropolitan Coalition ALP

60 60 60 60
May-03 May-05 May-07 May-09 May-03 May-05 May-07 May-09

Released: 20 May 2009 Coverage: persons 18 years and over, all states and the ACT.
Interview period: 11 May – 17 May 2009 Stratified by gender, age and location.
Sample size: 1200

© 2009 The University of Melbourne, Melbourne Institute of Applied Economic and Social Research
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