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Consumer confidence at nine-month low

AAP logoAAP 13/12/2016

Rising concerns about the Australian economy, interest rates and the labour market have pushed consumer confidence to its lowest level since April, a new survey shows.

The Westpac-Melbourne Institute Index of Consumer Sentiment dropped by 3.9 per cent to 97.3 points in December, from 101.3 points in November and below the 100 point level at which optimists outnumber pessimists.

Westpac chief economist Bill Evans says the result has "jolted" the recent air of stability and confidence.

"It is likely that the key reasons behind this fall in confidence are related to renewed concerns around the economy; interest rates; and the labour market," Mr Evans said.

The fall in consumer confidence comes despite gains in the Australian share market, he said.

Survey respondents reported a significantly less favourable assessment of economic conditions, employment and interest rates since September, while assessments of budget and tax; international conditions and politics were about the same.

"Supporting these concerns would have been the announcement that the Australian economy contracted in the September quarter, although because the media, quite appropriately in my view, chose not to raise any 'recession' scares the impact on confidence seems to have been relatively modest," Mr Evans said.

Respondents expressed concern about the interest rate outlook, given that banks have been raising some rates but views on the housing market were mixed.

The survey, based on 1,200 adults across Australia, was conducted in the week from December 5 to 10, 2016.

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