Australia: Consumer sentiment jumps to an over four-and-a-half-year high in July
The Westpac-Melbourne Institute Index of Consumer Sentiment jumped from 102.1 in June to 106.1 in July, the highest reading since November 2013 and further above the 100 mark that separates optimism from pessimism among consumers, where it has now been for eight consecutive months.
July’s rise was the result of a broad-based improvement in all components of the index, following a strong first quarter and encouraging data for the second quarter. Both forward-looking expectations and assessments of current conditions improved, most likely a consequence of the income tax cuts which came into effect on 1 July. Consumers’ view of economic conditions over the next five years surged, while they also had higher expectations of the economic outlook over the next 12 months. Consumers were more optimistic about family finances compared to a year ago, and held more positive expectations on family finances for the coming 12 months. Moreover, households were less concerned about future unemployment and were more willing to purchase major household items. On the other hand, although the index remained in positive territory, consumers were slightly less likely to buy a dwelling despite recent price corrections in the housing market.