Consumer sentiment reaches 3-year high: survey
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The news: Australian consumer sentiment improved this month, boosted by the Reserve Bank's decision to cut interest rates in February and a further easing in cost-of-living pressures, according to the Westpac Melbourne Institute Consumer Sentiment Index.
The numbers: The index rose 4% to 95.9 in March from 92.2 in February, reaching a three-year high. A ‘neutral’ level is a reading of 100, meaning pessimists still outnumbered optimists by around 4 percentage points.
The survey's sub-indices tracking expectations for the economy remain below the levels seen in November last year, when the US presidential election was being held. The 'economic outlook, next 12 months' sub-index rose 3.6% to 96, while the 'economic outlook, next 5 years' sub-index rose 4% to 101.5. The November peaks for the '12 month' and '5 year' economic outlook sub-indices were 100.9 and 104.2 respectively.
The context: Westpac's head of Australian macro-forecasting Matthew Hassan said the latest data points to a recovery in consumer sentiment, which began in the second half of last year but lost its way over the Christmas and New Year period.
Despite the improvement, Hassan said, there are still some signs of unease, particularly around developments abroad. Responses in March showed that while consumers detected a marked improvement in the domestic news-flow, the news from abroad has become more troubling.
