The Westpac Melbourne Institute monthly Consumer Sentiment survey has just been released showing another improvement of 3.8% on top of last months 1.9% recovery.
Westpac Chief Economist Bill Evans characterised the recovery, which has taken the index to 98.5, as a “pleasing result” and indeed it is given the survey period includes the big uptick in the unemployment rate to 6.4% that was released last week.
The good news, in light of yesterday’s big drop in the ANZ weekly confidence measure, is that the Westpac sentiment index is just 1.2% below pre-budget levels although it is still 10.8% below the post election spike.
“The rebound in confidence augurs well for a continuation of the lift in retail sales reported for June, which followed three consecutive soft months”, Evans wrote.
The sub-index looking at employment saw unemployment expectations drop from an index level of 156.1 to 151.4 for a fall of 3% and Evans said that “households do appear to be gradually feeling more secure in their employment despite the negative reception to the Budget”.
That’s great news.
Indeed while Evans notes the ongoing uncertainty, he is confident enough in the outlook to say he expects that consumers will “be running at a faster pace in the second half of 2014 than in the first half with some spill-over to non-mining business investment and employment”.
Coming on top of the NAB Business Survey yesterday this is good news for the economic outlook and while Evans thinks the RBA is on hold until the third quarter of 2015 he expects the next move to be an increase in rates.
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