Australian consumer confidence worsens in wake of federal elections

Consumer confidence in Australia during the month of July, so far, has worsened, which is a sign that the households had reservations about the economic outlook in run up to 2016 federal election, which revealed an increasingly divided country.

The Westpac-Melbourne Institute survey of consumer sentiment fell 3 percent in July, following a decline of 1 percent the previous month. In May the index surged 8.5 percent to its highest level in more than a year.

The monthly advance was also the biggest since August 2015. The major catalyst in May was a surprise interest rate cut by the Reserve Bank of Australia (RBA). Officials voted to lower the main cash rate by 25 basis points to 1.75 percent, a new all-time low.

The survey was conducted during the month of July in the height of election season, which embattled Prime Minister Malcolm Turnbull against Labor leader Bill Shorten and a growing list of independent candidates. In run up to the electoral results, Turnbull’s conservative coalition has finally secured the 76 seats needed to form a majority government, based on 83 percent of votes counted.

In the days following the vote, it appeared unlikely that the coalition would be able to reach that pivotal mark. By last count, the Labor Party had secured 67 seats. It is projected to obtain a total of 69 seats once all the votes are counted.

Meanwhile, the consumer sentiment index is a monthly gauge of consumer spending which accounts for more than half of Australia’s gross domestic product. The survey also gauges consumers’ assessments of personal savings and labor market conditions.

Separately, the state-run Australian Bureau of Statistics will release latest employment figures for June. Australia’s economy is forecast to have added 10,000 jobs in June following an increase of 17,900 the previous month.