AUSTRALIA DATA: Consumer Sentiment Returns To Pre-Tightening Level

Westpac consumer confidence has seen a sharp improvement over the second half of the year but the US election result has added some uncertainty. November rose 5.3% m/m to 94.6 after 6.2%. It is now its highest since April 2022, the month before the RBA began to tighten, and up 18.3% y/y%. Rates have been unchanged for a year now and real incomes have begun to rise, which is likely supporting the sentiment recovery, but it remains below the historical average and the neutral 100-level.

• The survey week ended November 9 and so included the RBA decision (Tuesday) and US election result (Wednesday). Westpac observed that responses were materially higher at the start of the week than the end. The RBA announcement didn’t impact sentiment but there was a “sharp fall” following the US election outcome with it rebounding tentatively by week end.
• The significant range of responses added an “unusually high degree of uncertainty”. The key will be whether the US election impact is sustained or whether domestic factors drive sentiment again next month.
• Other details were positive with 35% planning to spend less on Christmas this year, closer to average, compared with 40% in 2022 and 2023. But the “time to buy a major household item” was little changed and remains well below neutral.
• Mortgage rate expectations fell 3.2% to the lowest level since August 2012. Around 52% expect mortgage rates to be “unchanged or lower” by November 2025 up from July’s 27%.
• There were significant rises in the forward looking outlooks for family finances and the economy. 
• Consumers are feeling secure in their jobs with unemployment expectations down 7.2% to the lowest since April 2023. October labour market data print on Thursday.
• “Time to buy a dwelling” jumped 11.3% but was driven by Victoria where prices have underperformed. Overall house price expectations fell 2.1%. 

Australia Westpac consumer confidence index