Later this morning the closely watched Westpac-MI consumer sentiment report for September will be released, a trusted source of information on the mindset of Australian consumers.
Here’s the state of play.
- The survey is based upon responses from 1,200 adults across Australia and is generally conducted the week prior to the results being released.
- A reading of 100 is deemed neutral, meaning the number of optimists and pessimists is equal. A figure above 100 indicates optimists outnumber pessimists while a figure below 100 suggests pessimists outnumber optimists.
- In August the index jumped by 7.8% to 99.5. It was the largest percentage increase since February, and left confidence levels at the highest level since May. It was also well above the 92.2 level of July, the lowest level recorded since December 2014.
- The huge improvement in the headline index was broad based in nature. Perceptions on family finances, both looking backwards and for the year ahead, jumped by 15.5% and 3.9% while sentiment towards the near and long-term economic outlook bounced by 13.4% and 5.8% respectively. Understandably, the gauge on whether now was a good time to buy a major household item rose by 3.7%.
- Strong house price growth likely contributed to the sharp improvement seen in sentiment. Westpac noted that confidence among those households who owned their home outright, or who currently hold a mortgage, rose significantly more than non-property owners.
- Improved expectations towards the labour market may have also contributed to the lift in sentiment. The surveys unemployment expectations sub-index fell by 2.1% following a 1.3% decline in July. The lower the reading, the more confident consumers are on the outlook for employment.
- Given the timing of the survey period, it will be interesting to see whether the index can hold last month’s gain – or indeed improve upon it – in September. Last week, Australian Q2 GDP and July retail sales both disappointed badly on the downside, something that contributed to the separate ANZ-Roy Morgan consumer confidence index plummeting to the lowest level seen since July 2014 last week.
The survey will be released at 10.30am AEST. Business Insider will have full coverage as soon as the data drops.
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