| Actual | Previous | |
|---|---|---|
| Index Level | 79.2 | 79.0 |
Highlights
Australia's Westpac-Melbourne Institute index of consumer sentiment edged higher on the month in June, increasing to 79.2 from 79.0 in May. Respondents reported weaker confidence about the outlook for the economy and their personal finances over the next 12 months, but their assessment of longer-term economic prospects improved.
Weakness in confidence reflects ongoing concern among consumers about the impact of policy tightening that has already been delivered by the Reserve Bank of Australia and expectations of additional tightening. This month's survey was conducted over four days last week, just before and just after the RBA increased policy rates by 25 basis points. Respondents who were surveyed before this decision were much more confident than those surveyed after.
More than three-quarters of respondents expect further interest rate increases by the RBA over the next 12 months with almost half expecting a further increase of at least 100 basis points. The survey indicates that respondents are less confident about the outlook for the labour market and less confident that now is a good time to buy a house or major household item. Cost of living pressures were also cited as a major factor weighing on sentiment.
Weakness in confidence reflects ongoing concern among consumers about the impact of policy tightening that has already been delivered by the Reserve Bank of Australia and expectations of additional tightening. This month's survey was conducted over four days last week, just before and just after the RBA increased policy rates by 25 basis points. Respondents who were surveyed before this decision were much more confident than those surveyed after.
More than three-quarters of respondents expect further interest rate increases by the RBA over the next 12 months with almost half expecting a further increase of at least 100 basis points. The survey indicates that respondents are less confident about the outlook for the labour market and less confident that now is a good time to buy a house or major household item. Cost of living pressures were also cited as a major factor weighing on sentiment.
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.
