Australia: Consumer sentiment rebounds in February
The Westpac-Melbourne Institute consumer sentiment index rose from 99.6 in January to 103.8 in February. Therefore, it moved back above the 100-point mark that separates optimism from pessimism among consumers.
February’s drop was the result of a broad-based improvement in the sub-components of the index, largely driven by an easing monetary policy stance from the Reserve Bank and solid labor market conditions. Consumers’ assessments of their personal finances compared to a year ago as well as their expectations of their finances in the next 12 months improved significantly, likely thanks to a new wait-and-see approach from the Central Bank and tax cuts scheduled to come into effect in July. Moreover, expectations of economic conditions in the next five years became rosier, as did the general economic outlook on the next 12 months, both of which moved further above their longer run averages. Additionally, the number of consumers expecting unemployment to increase in the year ahead fell to the lowest level in seven years, on the back of the continued solid performance of the labor market. However, consumers were less likely to buy a dwelling due to tighter lending standards and as they expected further house price corrections. Lastly, respondents’ propensity to purchase major household remained broadly unchanged.