| Actual | Previous | |
|---|---|---|
| Index Level | 84.3 | 80.3 |
Highlights
Australia's Westpac-Melbourne Institute index of consumer sentiment rose 5.0 percent on the month from 80.3 in December to 84.3 in January. This is the biggest monthly increase since April 2021. Respondents reported improved sentiment about the outlook for the economy over the next 12 months and 5 years and their finances over the next 12 months and are also more optimistic about purchasing a major household item or a house. Nevertheless the index remains close to historic lows seen during the early stages of the Covid-19 pandemic and continues to indicate that sentiment among consumers is weak.
This month's survey was conducted earlier in the month. The Reserve Bank of Australia does not hold policy meetings in January, so sentiment this month was not impacted by any changes to monetary policy or information about the policy outlook. The proportion of respondents expecting mortgage rates to increase by at least 100 basis points from current levels over the next 12 months fell modestly from 50 percent in December to 48 percent in January. Respondents remain relatively confident about the outlook for the labour market.
This month's survey was conducted earlier in the month. The Reserve Bank of Australia does not hold policy meetings in January, so sentiment this month was not impacted by any changes to monetary policy or information about the policy outlook. The proportion of respondents expecting mortgage rates to increase by at least 100 basis points from current levels over the next 12 months fell modestly from 50 percent in December to 48 percent in January. Respondents remain relatively confident about the outlook for the labour market.
Definition
The Westpac-Melbourne Institute Index of Consumer Sentiment is based on a survey of 1,200 consumers on their assessment of short-term and long-term prospective economic conditions and their own financial circumstances. The survey is conducted early each month, usually just before and just after the Reserve Bank of Australia's monthly policy meeting.
Description
The pattern in consumer attitudes and spending is often the foremost influence on stock and bond markets. For stocks, strong economic growth translates to healthy corporate profits and higher stock prices. For bonds, the focus is on whether economic growth is too strong and leads to inflation.
Consumer spending is the largest part of economic activity, so markets always closely follow consumer behaviour and sentiment. The more confident consumers are about the economy and their own personal finances, the more likely they are to spend. With this in mind, it's easy to see how this index of consumer attitudes gives insight to the direction of the economy. Just note that changes in consumer confidence and retail sales don't move in tandem month by month.
Consumer spending is the largest part of economic activity, so markets always closely follow consumer behaviour and sentiment. The more confident consumers are about the economy and their own personal finances, the more likely they are to spend. With this in mind, it's easy to see how this index of consumer attitudes gives insight to the direction of the economy. Just note that changes in consumer confidence and retail sales don't move in tandem month by month.
