Confidence up almost 5% in the last monthConsumers confidence rose almost 5% in the last month, according to the latest Westpac Melbourne Institute Index of Consumer Sentiment Confidence rose 4.7% in June to 102.2 – a jump from 97.6 in May.
“After falling sharply through April and May, consumer sentiment recovered in June.””It appears that some of the factors behind the sharp drop in sentiment in May were temporary. In particular, concerns stemming from the Federal Budget may have eased somewhat in June,” said Westpac Senior Economist, Matthew Hassan.
The 4.7% rise takes the level of the index back over the 100 level indicating optimists outweigh pessimists. However, the margin is slim.Westpac now predicts Reserve Bank will cut rates next in August with a 25bp reduction.
There was also good news for retailers with the most positive aspect of the survey continues to be around views on ‘time to buy’. Views on “whether now is a good time to buy a major household item” posted a modest 3.7% gain in June, and the outlook for housing market also jumped.
In fact, all components of the Consumer Sentiment Index improved between May-June, last.There were strong gains were around family finances – which rose 8.5% Vs a year ago, expectations for finances for the next year also jumped 5%.
“Clearly consumers see this as an opportune time to make major purchases or enter the housing market, likely reflecting the low cost of finance and comparatively good affordability,” according to Westpac Melbourne Institute Index.
But its not all roses.
“Consumer confidence remains 8.2% lower than its peak early in the year,” warns Hassan.
The deterioration in sentiment around Australia’s economic outlook remains a worry for consumers, according to the Index, with the recent sharp sell-off in the sharemarket and the slide in the Aussie dollar.