Australia: Consumer sentiment rises in August
August 10, 2016
The Westpac-Melbourne Institute Survey of Consumer Sentiment increased 2.0% in August as the index rose from July’s 99.1 to 101.0. The increase drove the index to cross the 100 mark and the number of optimists outnumbers pessimists once again.
The institute noted that the Central Bank’s early August interest rate cut had a far lesser impact on consumer confidence than the previous cut. When the Reserve Bank of Australia last cut its interest rate in May, consumer confidence jumped 8.5%. According to the institute, the difference lies primarily in the surprise effect of the May rate cut, while the Bank’s most recent cut had generally been expected. Moreover, banks did not pass the full cut on to mortgage borrowers this time. The political instability following the recent federal elections also weighed on consumer confidence. Nevertheless, the institute concluded that, “overall the lift in the Index is still consistent with an improved outlook for the Australian economy.”
Author: Christopher Mc Innes, Economist