Third month of consumer sentiment gains dented by RBA rates hold: Westpac Survey
Make us a preferred source
Make us a preferred source on Google
The news: Australian consumer sentiment improved for a third straight month in early July, despite disappointment in the Reserve Bank of Australia’s (RBA) decisions to keep the cash rate unchanged, according to the latest Westpac-Melbourne Institute index.
The numbers: The index rose 0.6% from 92.6 in June to 93.1 in July. Those who were surveyed before the RBA decision returned a higher index of 95.6 but those who were surveyed after the decision returned a lower index of 92.
Compared to the same period last year, the consumer sentiment index was 12.6% higher. However, Westpac head of Australian macro-forecasting Matthew Hassan said sentiment is still at “‘cautiously pessimistic’ levels overall”.
The unemployment expectations index also rose by 1.1% to 128.7 in July, which is in line with the long-run average. The ‘time to buy a dwelling’ index declined 5.1% to 88.5.
The context: Of the five sub-indexes, three improved in July. The two sub-indexes relating to family finances improved as did the near-term expectations of the economic outlook.
Longer term economic outlook expectations declined while relating to the variable mortgage rate declined to a new 13-year low.
What they said: Although there is a chance that the RBA could hold rates again after its next meeting on 11-12 August if quarterly inflation exceeds the bank’s expectations, Hassan expects a cut.
“The more likely outcome, however, is that the June quarter data provides the confirmation of inflation inside the 2–3% target range that the RBA is seeking. This will clear the way for a 25bp cut to the cash rate, followed up by another at the November meeting,” Hassan said.
