| Actual | Previous | |
|---|---|---|
| Index Level | 82.0 | 79.7 |
Highlights
Australia's Westpac-Melbourne Institute index of consumer sentiment rose 2.9 percent on the month from 79.7 in September to 82.0 in October. This follows declines in the index in the two previous months and takes it to its highest level since April, though it remains at historically low levels. This month's survey was conducted over four days last week, just before and just after the Reserve Bank of Australia left its main policy rate on hold at 4.10 percent for the fourth consecutive month, and suggests that consumer sentiment has begun to improve in response to this pause in policy tightening.
Respondents reported slightly weaker confidence about the near-term outlook for the economy, but their assessment of longer-term economic prospects improved. Respondents are also now more confident about their own financial position and prospects and more confident that now is a good time to buy a house or a major household item. Nearly two-thirds of respondents still expect mortgage rates to increase over the next twelve months, despite the recent pause in rate hikes by the RBA.
Respondents reported slightly weaker confidence about the near-term outlook for the economy, but their assessment of longer-term economic prospects improved. Respondents are also now more confident about their own financial position and prospects and more confident that now is a good time to buy a house or a major household item. Nearly two-thirds of respondents still expect mortgage rates to increase over the next twelve months, despite the recent pause in rate hikes by the RBA.
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.
