The Westpac Melbourne Institute measure of Consumer Sentiment index for September was released this morning and showed another big lift jumping to three year highs with an increase of 4.7% to and an index value of 110.6. This is the highest level since December 2010 and coming on top of the improved NAB Business Confidence released yesterday bodes well for an improved economic outlook in Australia in the months ahead.
Westpac Chief Economist Bill Evans said in his statement accompanying the data:
… it is reasonable to conclude that the election result played an important if not leading role in this strong boost to consumer sentiment… The result is comparable with the boost to the index in March 1996 when the coalition was returned after 13 years in opposition.
But the best news is in the employment expectations which showed a 6.6% improvement in job security which might go someone to fixing the disconnect between recently high sentiment and weak retail sales, Evans believes.
The survey also asks respondents where they think the wisest place for savings is, and there are signs of a more upbeat mood on that measure too. Evans again:
In September this showed a marked decline in the proportion of households who see ‘low risk’ options as the wisest place for savings. The proportion preferring bank deposits fell by 4.6ppts to 29.3%. That proportion is now down by 9.7ppts since September last year. The proportion favouring ‘pay down debt’ was down 2ppts to 13.8% and is now down by 6.7ppts since September last year.
The Aussie dollar and ASX are marginally higher as a result of the data and no doubt bulls in both markets will be hoping that Australian households might just be starting to think about spending more which will help the economy adjust to the changing tenor of the mining sector.
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