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Consumer confidence remains weak in April

Consumer confidence remains weak in April

Consumer confidence has grown slightly in April from the month before, but remains weak particularly in metropolitan areas, according to Westpac (ASX:WBC) and the Melbourne Institute.

The Westpac-Melbourne Institute Index of Consumer Sentiment grew 1.2% in April to 105.3 points, up from 104.1 in March.

Westpac Chief Economist Bill Evans called the increase “a predictable yet lacklustre result.”

Consumer confidence for metropolitan residence fell by 4.6% using the metric, compared to a 12.2% surge for rural respondents.

The shift meant the confidence index for metro regions was below the index for non-metropolitan areas for the first time since 2009.

Evans attributed the decline in the cities to high debt levels, fragile house prices, sharp increases in interest rates and higher utility and education costs.

By contrast, rising prices for commodities including beef, wheat, lamb and cotton and extensive rainfall in the Eastern states have helped improve confidence in non-metro regions.

Overall consumer sentiment is being affected by conflicting factors, including on the positive side flat interest rates, strong employment and job security as well as the strong Australian dollar.

But balancing this out are factors including an 8% increase in the price of crude oil due to the political turmoil in the middle east and North Africa, and concern over the run of Japanese disasters.

The number of respondents that thought that now was a good time to buy a house fell 5.1%, the researchers said, a measure that usually declines when interest rates are hiked.

But concerns over domestic finances are thought to be affecting confidence in housing even as interest rates stay steady.

Westpac and the Institute believe there is little chance of the Reserve Bank making any changes to rates during the board's next meeting on May 3.

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Tags ASX:WBCBill Evansconsumer confidenceWestpac-Melbourne Institute

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