As expected, consumer sentiment has taken another lurch downwards, matching the slump in business confidence and conditions revealed yesterday.

The Westpac-Melbourne Institute consumer sentiment index released today shows a 6.7% fall to 79 points, its lowest point since January 1992. The National Australia Bank’s June survey showed a similar fall in confidence and conditions in the business sector, with the bank warning the slide had a way to go.

Today the Westpac survey shows the pace of the fall in consumer sentiment has quickened: June saw a 5.6% drop, now it’s approaching 7%. Westpac chief economist Bill Evans said the index was at its worst level since Australia began emerging from the recession of 1990-91.

The survey of 1,200 people was taken last week, when crude oil prices hit a record $US145.85 a barrel and petrol prices in major capital cities hit or topped $1.70 a litre.

Westpac’s Bill Evans put the larger slump down to publicity about petrol and oil prices, so if the fall in oil prices of the past two days of 5% is sustained in coming weeks, the August survey could show a slowing in the loss of confidence.

The survey showed that consumers are now very negative about the longer outlook; there was a sharp 15.5% fall to 62.9 points in the reading about expectations for economic conditions over the next 12 months. Compared with July 2007, that reading has weakened by 51.1%. And consumers are also just as gloomy about their financial position now, compared to a year ago: the slide was smaller, down 6.2% to a similar figure of 63.7 points.

There’s also gloomy news from the home building industry. Last figures from the Australian Bureau of Statistics showed a 6.5% fall in approvals for owner occupied and other dwellings.

Today, housing finance figures showed a similar fall for the same month of May. The Westpac consumer confidence survey showed a sharp fall in May, so in that respect its no wonder that it was a miserable month for the new and existing housing sectors

The ABS said that in seasonally adjusted terms, the total value of dwelling finance commitments excluding alterations and additions fell 6.1%, with investment housing commitments down 6.8% and owner-occupied housing commitments off 5.7%. According to the ABS’s analysis the total value of owner occupied housing commitments (seasonally adjusted) fell 5.7% (or $766 million in May 2008), following a revised decrease of 4.8% in April 2008.

“The decrease this month was due to falls in the purchase of established dwellings excluding refinancing (down $434 million or 5.6%), refinancing of established dwellings (down $218 million, 5.6%), construction of dwellings (down $60 million, 5.2%) and the purchase of new dwellings (down $55 million, 10.9%),

“The total value of investment housing commitments (seasonally adjusted) decreased 6.8% (down $403million) in May 2008 compared with April 2008, following a revised increase of 0.7% in April 2008.

“The decrease this month was due to falls in the purchase of dwellings by individuals for rent or resale (down $366 million or 7.9%) and the purchase of dwellings by others for rent or resale (down $111 million or 15.8%) while construction of dwellings for rent or resale rose (up $73 million or 12.0%).”