SYDNEY (Reuters) - Australian consumers turned glum in October despite three rate cuts since the start of the year as fears about the near-term economic outlook sapped their confidence, according to a key gauge.
Wednesday's survey showed the Melbourne Institute and Westpac Bank (AX:WBC) index of consumer sentiment dived 5.5% in October, after slipping 1.7% in September.
The index was down 8.6% from a year earlier, and at 92.8 indicated pessimists far outnumbered optimists. This is the lowest level for the index since July 2015.
The results of the survey of 1,200 people will be a concern for the Reserve Bank of Australia (RBA), which has cut interest rates to a record low 0.75% in part to support consumer demand.
"Typically, an interest rate cut boosts confidence particularly around consumers’ expectations for and assessments of their own finances," said Westpac Chief Economist Bill Evans.
"In this survey these components of the index fell by 3.7% and 4.9% respectively. This may be because, despite the rate cut, assessments for the economy overall plunged by 6% (the twelve month outlook) and 9.1% (the five year outlook)," he added.
"Consumers are looking behind the reason for the rate cut and, arguably, the absolute level of rates and getting nervous."
