Allianz Future Optimism Index: Australians’ optimism suffers post-Budget slump

Allianz Future Optimism Index: Australians’ optimism suffers post-Budget slump

Sydney, 3 June 2013

Australians’ optimism about the future of the economy has slumped following the May Federal Budget.

Falls in optimism were recorded nationwide, with the largest decline experienced by West Australians.

Queenslanders’ optimism score also fell to be the lowest among the States and returned to negative territory for the first time in 12 months.

The fall in optimism is most marked among older Australians, particularly those aged 65 and over who have previously reacted adversely to falls in interest rates, which also occurred in May.

After recording similar levels of optimism to men in February, women have regained their historical mantle as the less optimistic sex.

Optimism among ALP voters fell significantly more than for Coalition voters.

Allianz Australia Managing Director, Niran Peiris, said “Australians began 2013 in a much more optimistic frame of mind when it comes to their outlook on the economy, however, this has proved short-lived. After rising to a 12-month high in February, optimism about the future of the economy has slumped following the May Federal Budget.

While optimism has fallen across the country, the largest falls were seen in Western Australia, Queensland and NSW. The biggest fall occurred in Western Australia, which has renounced its historical title as the most optimistic State and fallen back into the pack. Optimism among Queenslanders also declined markedly to be the only State to record a negative score.

The fall in optimism about the future of the economy was particularly apparent among older Australians. Optimism among Australians aged 65 and over has reacted negatively in the past to falls in interest rates, so the Reserve Bank’s decision to cut rates in early May could also be a factor.

While both sexes have recorded similar levels of optimism over the last six months, women have usually been less optimism about the future of the economy than men and this difference re-emerged in May, with optimism among women falling more than for men.

Interestingly, despite a ‘Labor’ Budget, ALP voters recorded a much larger fall in optimism than their Coalition voting counterparts.

Survey results

All Australians

After hitting a 12-month high in February with an Index Score of 12, optimism about the future of the economy has slumped to a score of 5 in May.

Optimism Index for All Australians

Optimism by State

Optimism about the future of the economy fell nationwide, but was more apparent in particular States.

The biggest fall in optimism occurred in Western Australia, which has traditionally been the most optimistic State, where the Index fell from a national high of 23 in February to 9 in May. This puts WA back among the levels experienced in NSW and Victoria.

Queensland has regained its traditional mantle of Australia’s least optimistic State, falling from an Index of 8 in February to a low of -3 in May, to be the only State to record a negative score.

Optimism Index by State of Residence

Optimism by Age

The slide in optimism about the future of the economy was seen across age groups, but was particularly noticed among Australians aged 50 or more. The Index for those aged 65+ fell from a high of 18 in February (when they were the most optimistic age group) to 8 in May.

In the past, optimism among older Australians had been adversely impacted by falls in interest rates and it is possible the decision of the Reserve Bank of Australia to reduce interest rates in May also contributed to older Australians’ fall in optimism.

Optimism Index by Age

Optimism by Gender

The fall in optimism in May was larger among women than men. While the Index for men slipped from 12 in February to 7 in May, the fall in optimism among women was more marked, falling from 12 to only 3 in May. Historically, men have been found to be more optimistic about the future of the economy than women. This difference disappeared for around 6 months up to and including the February survey, however, the May results see a return to this difference in optimism between the sexes.

Optimism Index by Gender

Optimism by Voting Intention

The fall in optimism about the future of the economy was seen among voters from both sides of politics, although the fall was much larger for ALP voters, whose Index Score fell from a historical high of 31 in February to 19 in May, which is near the survey low for ALP voters.

Optimism Index by Voting Intention

Background

Allianz and Newspoll have joined forces to conduct a bi-monthly survey which measures Australians’ level of optimism about the future of the economy, environment and society, as well as their overall happiness. Optimism indexes in each of these four areas are created to measure changes in optimism over time and differences in optimism among those in different demographic groups.

Respondents’ score their level of optimism on a scale from zero to ten. Those that score between zero and three are regarded as pessimists and those that score between eight and ten as optimists. Those that score between four and seven are regarded as neutral.

The net result of deducting the proportion of pessimists from the proportion of optimists gives the relevant Optimism Index. A positive Optimism Index results if the number of optimists exceeds the number of pessimists, and the reverse results in a negative Optimism Index.

About the Allianz Future Optimism Index

The Newspoll survey on which the Allianz Future Optimism Indexes are based, asks around 1200 Australians to rate each of the following statements on a scale of 0-10, where 10 is extremely optimistic and 0 is not optimistic at all:

1. The future of the economy;
2. The future of the environment in relation to pollution and climate change;
3. The future of our society in relation to crime levels and community values;
4. The overall future prospects and happiness for you and your family.

Respondents’ score their level of optimism on a scale from zero to ten. Those that score between zero and three are regarded as pessimists and those that score between eight and ten as optimists. Those that score between four and seven are regarded as neutral.

The net result of deducting the proportion of pessimists from the proportion of optimists gives the relevant Optimism Index. An Optimism Index of 100 would result if all respondents scored between eight and ten and an Index of minus 100 if they all scored between zero and three.

A positive Optimism Index results if the number of optimists exceeds the number of pessimists and the reverse results in a negative Optimism Index.

More detailed demographic and geographic results for the Allianz Future Optimism Index are available on request.

The latest survey was conducted by telephone among a national sample of 1201 adults aged 18+. Fieldwork was conducted over the period of the 17-19 May 2013 and results were post-weighted using the latest Australian Bureau of Statistics population estimates.

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