| Actual | Previous | |
|---|---|---|
| Index Level | 81.0 | 82.1 |
Highlights
Australia's Westpac-Melbourne Institute index of consumer sentiment fell 1.3 percent on the month from 82.1 in December to 81.0 in January. This index has been volatile in recent months, declining in August and September, increasing sharply in October, falling again in November, and then increasing in December. 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 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 official statements about the policy outlook. Although financial markets are not pricing in cuts to policy rates later this year, more than half of respondents in this survey expect further increases in mortgage rates. Nevertheless, compared with last month, respondents are now more confident about economic conditions and their personal finances over the next twelve months.
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 official statements about the policy outlook. Although financial markets are not pricing in cuts to policy rates later this year, more than half of respondents in this survey expect further increases in mortgage rates. Nevertheless, compared with last month, respondents are now more confident about economic conditions and their personal finances over the next twelve months.
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.
