All about business

Australian consumer confidence fell in April to the lowest since 1993, reinforcing the central bank's view that the highest interest rates in 12 years will slow the $1 trillion economy.

The sentiment index dropped for a fourth month, falling 1.3 percent from March to 87.4, according to a Westpac Banking Corp. and Melbourne Institute survey released today in Sydney.

The third straight reading below 100, which shows pessimists outnumber optimists, suggests Reserve Bank of Australia Governor Glenn Stevens' back-to-back interest-rate increases in March and February are prompting consumers to scrap spending plans. Stevens last week said there is “some evidence that a moderation in demand is occurring'' and will cool the fastest inflation since 1991.

This month's report “emphasizes just how concerned households much be with the current economic environment,'' said Bill Evans, Westpac's Sydney-based chief economist.

The Australian dollar bought 93.04 U.S. cents at 10:33 a.m. in Sydney from 93.09 cents just before the report was released. The two-year government bond yield fell 1 basis point to 6.32 percent. A basis point is 0.01 percentage point.

The confidence index fell to the lowest since June 1993, when unemployment was close to a record high of 10.9 percent. In February this year, the jobless rate fell to 4 percent, the lowest since 1974.

The survey was conducted between March 31 and April 6. Stevens left the benchmark rate unchanged at 7.25 percent on April 1, after raising the rate four times since August 500 fast cash.

Home Loans

Homeowners are also paying more for their mortgages after the nation's five largest banks raised interest rates on home loans by an average of 83 basis points this year. That's more than the 50 basis points of increases by the Reserve Bank in that period.

Rate increases by the Reserve Bank and commercial lenders since August have added about A$210 ($195) to the monthly repayments on an average A$250,000 home loan.

Westpac's index measuring whether now is a good time to buy a major household item, such as a television or appliance, plunged 12.7 percent.

Today's report echoes a slump in business sentiment. Companies remained pessimistic about the economy in March for a record third month as concern about the slowing U.S. economy and the global credit squeeze saw Australia's stock market record its worst first quarter since 1987, a National Australia Bank Ltd. report showed yesterday.

Mounting household pessimism is already hurting consumer spending. Retail sales fell in January and February as consumers spent less on household goods and at restaurants and bars, a report showed last week.

Growth in the economy slowed to 0.6 percent in the December quarter from the previous three months, when it expanded 1.1 percent.

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