| Actual | Previous | |
|---|---|---|
| Index Level | 82.1 | 79.9 |
Highlights
Australia's Westpac-Melbourne Institute index of consumer sentiment rose 2.7 percent on the month from 79.9 in November to 82.1 in December. This index has been volatile in recent months, increasing in July, then falling in August and September, increasing sharply in October, and then falling again in November. Cost of living pressures have weighed on consumer sentiment, with survey responses also impacted heavily by monetary policy decisions over this period.
This month's survey was conducted over four days last week, just before and just after the RBA left its main policy rate on hold at 4.35 percent following an increase in that rate at their previous meeting early-November. Respondents who were polled before this the RBA decision to leave rates on hold 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 fell from 73 percent on the last survey to 60 percent.
Respondents reported weaker sentiment about the outlook for the economy over the next 12 months but are more confident about the outlook over the next 5 years. Respondents are more confident about their personal finances over the next twelve months are also now more confident that now is a good time to purchase a house.
This month's survey was conducted over four days last week, just before and just after the RBA left its main policy rate on hold at 4.35 percent following an increase in that rate at their previous meeting early-November. Respondents who were polled before this the RBA decision to leave rates on hold 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 fell from 73 percent on the last survey to 60 percent.
Respondents reported weaker sentiment about the outlook for the economy over the next 12 months but are more confident about the outlook over the next 5 years. Respondents are more confident about their personal finances over the next twelve months are also now more confident that now is a good time to purchase a house.
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.
