Consumer confidence on the rise
The Westpac Melbourne Institute Index of Consumer Sentiment recorded an 8.1 per cent increase in September, marking an increase from 89.6 in August to 96.9 in September.
Westpac’s Chief Economist, Bill Evans, described the increase as a “surprisingly strong result”, but added that global economic uncertainty meant that the bank was no long considering raising its interest rates.
Concrete evidence of the improved outlook for interest rates came shortly after the August survey when the major banks actually lowered their fixed rate mortgage rates. While possibly coming as a surprise this action would have comforted anxious households,” Mr Evans said.
A major contributing factor is likely to be the strong recovery in economic growth in the June quarter which was reported to have been 1.2% following the contraction of 0.9% in the March quarter, according to the index.
“Despite the surprisingly strong September rise, the Index remains at a weak level overall, reflecting the very weak starting point in August. It is 14.8% below the average reading in 2010; 14.4% below its level a year ago; 7.1% below the average for the first half of 2011 and 4.2% below the reading in June,” Mr Evans said.
However, confidence still remains at an overall weak level, down from 15 per cent from this time last year.