Consumer confidence tumbled to a two-year low during the first week of July, a survey of households suggests, suggesting a bleak outlook for the Australian economy.
The Westpac-Melbourne Institute consumer sentiment index released on Wednesday fell 4.1 per cent to 96.5 in July, dipping below the 100-point mark that separates optimism from pessimism.
"The fall in sentiment this month is troubling as it comes against what should have been a supportive backdrop for confidence," Westpac economist Matthew Hassan said.
It was the second drop in a row for the monthly measure of consumer sentiment following a dip of 0.6 per cent to 100.7 in June.
The survey of 1,200 adults - conducted via phone interviews between July 1 and July 5 - picked up some responses to the Reserve Bank of Australia's second consecutive monthly cut to the cash rate on July 2 and federal parliament's approval of tax cuts on July 4.
"Deteriorating expectations for the economy outweighed any near term support from the prospect of lower interest rates and tax relief," Mr Hassan said.
Respondents' views of the economy as a whole in the next 12 months dropped 12.3 per cent to a pessimistic 87.1, while their perception of their own family's finances during that period fell 8.0 per cent to 98.4 points.
The survey's unemployment expectations index increased 5.8 per cent in July, following a 5.1 per cent gain in June, indicating more people were worried about job losses rising in the year ahead.
This month's result lifted the unemployment expectations index "materially above its long run average for the first time since mid-2017," Mr Hassan said, adding that increased concerns were most apparent in NSW, Victoria and Western Australia.
The monthly Westpac-Melbourne Institute survey is one of two measures of consumer sentiment that the RBA tracks.
The other, a weekly poll by ANZ and Roy Morgan based on about 1,000 face-to-face interviews on Saturdays and Sundays, recorded a 1.1 per cent dip in consumer confidence in its most recent release on Tuesday.
