Australia: Consumer confidence recovers in May
May 11, 2016
The Westpac-Melbourne Institute Survey of Consumer Sentiment increased 8.5% in May as the index jumped from 95.1 in April to 103.2. May’s reading above 100 indicates that the number of optimists is greater than the number pessimists, contrasting the opposite situation suggested by April’s reading.
The institute noted that the two major events that impacted consumer sentiment were the release of the federal budget and the unexpected rate cut by the Reserve Bank, both in early May. The institute stated that the rate cut was the more impactful of the pair. This is likely because Australian home owners are attributing the cut to decreased mortgage rates in the future. The rate cut also spurred sentiment in the housing market. The institute elaborated that, “consumers’ assessments of housing conditions improved, although there was a fall in confidence around the outlook for house prices. The ‘time to buy a dwelling’ lifted by 12.1%, although it is still 6.4% below its level a year ago. The strongest gains were in the most volatile state – New South Wales.”
Author: Robert Hill, Economist