In May, consumer confidence recorded its biggest fall since the 2008 collapse of Lehman Brothers, sending a strong signal that rapid interest rate increases since late 2009 have started to squeeze the economy. But data on wages growth also showed pressures are building steadily in the labour market.
Wages grew in the first quarter of 2010 at their fastest pace since the end of 2008. Still, financial markets are now expecting an extended pause in interest rates with the next hike likely in 2011.
Consumer sentiment fell 7% in May from April, according to a monthly report by Westpac. In annual terms, the consumer sentiment index was still 21.6% higher. Also reported, wages rose a seasonally adjusted 0.9% in the first quarter of 2010 from the fourth quarter 2009 and rose 3.0% from a year earlier, the Australian Bureau of Statistics said. In the private sector, wages rose 0.8% in the first quarter from the fourth and rose 2.6% from a year earlier. Public sector wages rose 1.2% in the quarter and increased 4.3% from a year earlier.