Australian consumer sentiment lifted 1.9% this month to a three-year high, recovering most of last month’s post-election fall.
Westpac Melbourne Institute Index of Consumer Sentiment lifted to 110.3, suggesting that consumer confidence is on its way back to July-December 2010 highs.
Similarly, business confidence – measured by NAB’s monthly business survey – rocketed immediately after the election but fell back down in October according to data released yesterday, suggesting that business and consumer confidence hadn’t yet translated to better trading conditions.
Westpac’s November survey interviews were conducted during the Melbourne Cup week, when the Reserve Bank kept rates on hold and the unemployment rate held at 5.7%.
Westpac chief economist Bill Evans noted that while the official unemployment rate held, the October labour force report actually depicted a “very weak labour market”, reflected also today’s unemployment expectations sub-index rising 0.9% to 144.7.
Interestingly, while this month’s unemployment expectations are 11% above the November 2011 level, the broader consumer sentiment index is up 6.7% compared to November 2011.
“In effect, despite the Reserve Bank reducing interest rates by 225 basis points since November 2011 and Consumer Sentiment increasing, respondents are more concerned about the outlook for unemployment, and by implication their job security, than they were two years ago,” Evans wrote.
Reports of surging house prices also boosted confidence among homeowners, with confidence among outright homeowners up 6.1% although renter confidence fell 2.8%. Homebuying intentions rose 4.2% in the month, while still down 3.1% year-on-year.