The Westpac-Melbourne Institute index of consumer confidence fell by 4.1 per cent in July to 96.5 points.
With the grading scale of 100 being the pass mark between optimistic or pessimistic about the future, the result suggests consumers are not confident about the future.
Westpac senior economist Matthew Hassan believes the main drivers continue to deepen concern about the outlook of the Australian economy
“The fall in sentiment this month is troubling as it comes against what should have been a supportive backdrop for confidence,” said Mr Hassan.
Mr Hassan believes the July 2 rate cut had little impact on the sentiment investors felt about the Australian economy.
“Deteriorating expectations for the economy outweighed any near-term support from the prospect of lower interest rates and tax relief,” said Mr Hassan.
Concerns about the economy has led people to believe their employment is under threat.
“Increasing concern about the economy is undermining consumers’ sense of job security. Confidence in the labour market continued to deteriorate sharply in July,” said Mr Hassan.
As farmers feel the pinch through harshening conditions, they are becoming less optimistic about their futures.
“Sentiment also recorded a big 14 per cent drop in regional NSW where drought conditions have intensified markedly in recent months,” said Mr Hassan.
This is in contrast to Roy Morgan and ANZ’s survey data, which suggested that investor confidence has sharply risen and then fallen over the past month.