Softer sentiment after RBA hike – TD Securities

Finance

Softer sentiment after RBA hike – TD Securities

TD Securities analysts note that Australian consumer and business surveys softened, with Westpac Consumer Sentiment falling for a third month after the recent RBA rate hike. Most respondents expect higher rates, yet analysts do not see the RBA reacting to this data. The NAB Business Survey shows easing conditions and price pressures, though capacity utilisation remains above average.

Consumer and business surveys lose momentum

“Westpac‘s Consumer Sentiment Survey for February and NAB’s Business Survey for January were released today. Both surveys came in softer than prior prints.”

“Firstly on the Consumer survey, sentiment slipped for the 3rd straight month, -2.6% m/m, which is not a complete surprise in light of the RBA‘s hike last week. 80% of those surveyed expect higher rates with one-third saying they expect +100bps. We don’t expect the RBA to be too concerned with this report, even though consumer sentiment is at the low end of the past years range.”

“On the Business survey, Confidence was +3 vs +2 in December while Conditions slipped to +7 from +9. Trading and profitability softened and the employment index was steady, but forward orders improved to +2 from -1.”

“Capacity Utilisation eased to 82.9%, still 1.5pts above the LT average and price pressures eased – Labour costs 1.3% vs 1.7% prior, Purchase Costs 1.1% vs 1.3% prior, and Final Products prices 0.5% vs 0.8% prior. The business survey was taken before the RBAs hike last week.”