Consumer sentiment records strong lift
Consumer sentiment has recorded a 5.2 per cent bounce, with the Westpac Melbourne Institute of Consumer Index tracking it at 99.2 points in October to 104.3 points in November.
November’s results represent the first time in 16 months the Index has reached above the sacred 100 point mark, with Westpac Chief Economist, Bill Evans, describing it as a ‘welcome and surprisingly strong result.’
“After a long 16 month period when the Index held below 100 for 14 of those months we are finally starting to see that the Reserve Bank's 150bps of interest rate cuts is having an impact,” Mr Evans said.
Despite the strong upswing, Mr Evans warned against premature optimism, saying the Index is only 0.9 per cent higher than the level in November following the first rates cut from the Reserve Bank.
Mr Evans also said that the ongoing negative coverage of the vulnerabilities of the mining boom was continuing to unnerve households.
“We saw some evidence of this in the state results. Confidence fell sharply by 5.2% in Western Australia, the dominant resources state. Sentiment also fell heavily, by 8.7%, in South Australia where ongoing disappointment around the cancellation of the Olympic Dam project may be a factor. In contrast to this, confidence surged 14.2% in New South Wales where mining activity is less significant and, arguably, prospects are brightest for the property market,” Mr Evans said.
Mr Evans also noted that the upswing in housing, saying that confidence around whether now is a good time to purchase a dwelling had jumped 9.6 per cent to its highest level since September 2009. He also said that the news is generally good across the entire board.
“All components of the Index increased in November. The sub-indexes tracking: views on "family finances vs a year ago" increased by 11.1%; views on "expected family finances over the next 12 months " increased by 1.3%; views on "economic conditions over the next 12 months" increased by 6%; and views on "economic conditions over the next 5 years" increased by 3.4%; while the sub-index tracking responses to "whether now is a good time to purchase a major household item" increased by 5.1%,” he said.