| Actual | Previous | |
|---|---|---|
| Index Level | 79.9 | 82.0 |
Highlights
Australia's Westpac-Melbourne Institute index of consumer sentiment fell 2.6 percent on the month from 82.0 in October to 79.9 in November. Respondents reported improved sentiment about the outlook for the economy and their finances over the next 12 months but are more pessimistic about the outlook over the next 5 years. Respondents are also less confident that now is a good time to purchase a major household item or a house. The survey also shows that around a third of respondents expect to spend less this year during the Christmas holidays period than they did last year.
This month's survey was conducted over four days last week, just before and just after the Reserve Bank of Australia increased its main policy rate by 25 basis points to 4.35 percent after leaving rates on hold for four consecutive months. Officials also advised they will tighten policy further if necessary to meet their inflation target. Respondents polled before this rate increase were significantly more confident than those polled afterwards. The proportion of respondents expecting mortgage rates to increase from current levels over the next 12 months rose from 63 percent in October to 73 percent in November.
This month's survey was conducted over four days last week, just before and just after the Reserve Bank of Australia increased its main policy rate by 25 basis points to 4.35 percent after leaving rates on hold for four consecutive months. Officials also advised they will tighten policy further if necessary to meet their inflation target. Respondents polled before this rate increase were significantly more confident than those polled afterwards. The proportion of respondents expecting mortgage rates to increase from current levels over the next 12 months rose from 63 percent in October to 73 percent in November.
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.
