| Actual | Previous | |
|---|---|---|
| Index Level | 84.4 | 86.0 |
Highlights
Australia's Westpac-Melbourne Institute index of consumer sentiment fell 1.8 percent on the month from 86.0 in February to 84.4 in March. This decline follows a strong increase previously, extending the volatility in sentiment seen in recent months. The index has oscillated between increases and declines for the last seven months, largely reflecting shifting assessments of the outlook for monetary policy over this period. Cost of living pressures also continue to weigh on consumer sentiment.
This month's survey was conducted over four days last week, just before and just after the Reserve Bank of Australia policy meeting. Officials left policy rates on hold at that meeting but advised they would not rule out the possibility of additional rate increases in upcoming meetings. Respondents who were surveyed after this statement were much less confident about the outlook than those surveyed before.
Around 40 percent of respondents still expect further interest rate increases by the RBA over the next 12 months, with just over 20 percent expecting rate cuts, just over 20 percent expecting no change, and the balance saying they don't know. The survey indicates that respondents are less confident about the outlook for their family finances and the economic outlook over the next 12 months but, in contrast, are less pessimistic that now is a good time to buy a house.
This month's survey was conducted over four days last week, just before and just after the Reserve Bank of Australia policy meeting. Officials left policy rates on hold at that meeting but advised they would not rule out the possibility of additional rate increases in upcoming meetings. Respondents who were surveyed after this statement were much less confident about the outlook than those surveyed before.
Around 40 percent of respondents still expect further interest rate increases by the RBA over the next 12 months, with just over 20 percent expecting rate cuts, just over 20 percent expecting no change, and the balance saying they don't know. The survey indicates that respondents are less confident about the outlook for their family finances and the economic outlook over the next 12 months but, in contrast, are less pessimistic that now is a good time to buy 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.
