Consumer confidence plunges

Consumer confidence has plunged in Australia – to levels not  seen  since the last deep recession, in the early 1990s.

The Westpac leading index, which indicates the likely pace of economic activity over the coming three to nine months, slumped to -3.1 per cent in January.  That’s well below its long term trend rate of +3.2 per cent.

Senior   Westpac economist Matthew Hassan said the index is now in “deeply negative territory.”

And Mr Hassan said that is consistent with contracting economic activity.

He said the latest reading is the lowest seen on the index since August 1990, when this indicator plunged to -3.4 per cent.

“Back then, the economy had already entered what went on to become a deep, long lasting recession,” Mr Hassan said.

He said falling profits, lower share prices, slowing productivity growth and a slide in dwelling approvals had all contributed to the fall.

“The only positive contribution has been from higher overtime worked,” Mr Hassan said.

Meanwhile the Federal Treasurer, Wayne Swan, warned that the Australian economy has probably not hit its low point yet.

“It doesn’t appear so,” he told a radio interviewer.

But Mr Swan said decisions taken at the G20 Finance Ministers’ meeting in London last weekend should help to put a floor under the present global downturn.

He pledged that the government would use every tool of public policy to support growth in the Australian economy.