Westpac’s closely watched monthly gauge of consumer sentiment sagged 2.5 per cent in August against expectations for a rise. Australians aged 18 to 44 reported the biggest falls in confidence over the month, while Australians over 45 were more optimistic.
Citi economist Josh Williamson said households were disappointed the Reserve Bank failed to cut rates further in July and August and signalled it was unlikely to cut further.
Separate data today from the Australian Bureau of Statistics showed public and private sector wages grew 1 per cent over the three months to June, a little faster than the Reserve Bank expected, raising further doubts of any rate cuts at all in coming months.
"The survey period also followed intense media commentary on Australia’s inability to meet gold medal expectations at the London Olympics,” he said.
“One academic historian commented that never in the history of the sport had Australians been so disappointed that some competitors had not won their events."
Australian won 17 gold medals in Athens in 2004 and 14 in Beijing but collected only seven in London.
Westpac economists were disappointed given the spate of positive news around since the survey was last taken in July, pointing to robust retail sales, $1.9 billion of cash government handouts and European authorities’ renewed determination to do "whatever it takes" to keep Greece in the eurozone.
The Westpac confidence index registered 96.6 in August, the sixth consecutive month it has been below 100, its long-run average.
The ABS’s quarterly labour cost index, which the Reserve Bank tracks closely to estimate the impact of wages growth on future inflation, finished 3.7 per cent higher in the financial year to June.
Mr Williamson said Australia’s Olympic performance was unlikely to prompt the Reserve Bank to cut interest rates.
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