| Actual | Previous | |
|---|---|---|
| Index Level | 95.9 | 92.2 |
Highlights
Australia's Westpac-Melbourne Institute index of consumer sentiment surged 4.0 percent to 95.9 in March from 92.2 in February.This is the index's highest level since March 2022 and follows the decision by the Reserve Bank of Australia last month to cut policy rates for the first time since 2020.
Respondents to the survey reported improved confidence in the outlook for the domestic economy over the next twelve months and five years. Respondents also reported slightly improved sentiment about the outlook for family finances over the next twelve months and five years and were more positive about their finances relative to twelve months previously.
Although RBA officials expressed caution about the prospect of further rate cuts in coming months, more than a third of survey respondents expect mortgage rates to fall over the next twelve months and only a quarter expect them to increase. Respondents were also more confident about the labour market outlook.
Respondents to the survey reported improved confidence in the outlook for the domestic economy over the next twelve months and five years. Respondents also reported slightly improved sentiment about the outlook for family finances over the next twelve months and five years and were more positive about their finances relative to twelve months previously.
Although RBA officials expressed caution about the prospect of further rate cuts in coming months, more than a third of survey respondents expect mortgage rates to fall over the next twelve months and only a quarter expect them to increase. Respondents were also more confident about the labour market outlook.
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.
