Australia: Consumer confidence rebounds after flood-influenced January decline
February 17, 2011
Consumer confidence recovered in February after floods had dragged sentiment to a six-month low in January. The index of consumer sentiment, published by Westpac and the Melbourne Institute, strengthened from 104.6 points in January to 106.6 points in February. At the current level, the index remains above the long-term average level of 100 points but is below the 113.7 points averaged over 2010. The negative effect of the floods on consumers, particularly those from Queensland was clearly evident in the January fall, as respondents saw the floods negatively impacting the country's economic prospects. The February rebound, after the plunge in January, was again mitigated by adverse weather conditions, as Cyclone Yasi hit north-Queensland on 3 February, causing large damages in several sectors. The monthly increase in consumer sentiment was supported by the Reserve Bank's decision to leave interest rates on hold. In addition, the unemployment rate remained steady at 5%, the lowest level since January 2009. The 12-month outlook for the economy improved after sinking in January while the 5-year outlook soared 10.2%, after remaining flat the previous month. While households' assessment of their current financial situation worsened, their outlook improved and they are just as likely to purchase durable goods as they were the previous month.