MNI DATA ANALYSIS: Australia Consumer Morale Rebounds in Q4

--But Questions Remain on How Morale Rise Will Translate Into Spending

     SYDNEY (MNI) - The Westpac-Melbourne Institute's monthly consumer sentiment

survey rose in December, taking the average for the fourth quarter around 5%

above that of the preceding quarter.

     According to Westpac, the outcome suggests consumer sentiment may have

bottomed out in Q3 and spending too may have reached it trough during that

quarter. 

     However, questions remain on how the rebound in confidence will translate

into spending decisions given weak income growth, a low savings rate and high

household debt. These new data  remove some downside risks to the Reserve Bank

of Australia's monetary policy but aren't a sufficient indicator to make a

convincing case for a rate hike next year.

     Data published by Westpac-Melbourne Institute Wednesday showed consumer

sentiment rose 3.6% m/m in December to above 100 at 103.3. All five components

of the index improved, with the sub-index on "family finances vs a year ago"

posting the biggest gain of 5.6% m/m to an 18-month high of 89.6, though the

index remained below the 100 mark.

     The key positive in the survey was the index on unemployment expectations,

which was the lowest since May 2011 and points to consumers becoming more

comfortable about the outlook for jobs. This signals spare capacity in the labor

market could diminish further in the period ahead, which is important for wage

growth to acceleration and thus for inflation to pick up pace.

     The "time to buy a dwelling" index rose 2.3% to 100.6, the first reading

above 100 since the start of the year, but the detail remained weak in the two

big states of New South Wales and Victoria. The index of house price

expectations rose marginally but this masked a sharp slide in NSW, where the

index fell 12% to 25% lower than a year earlier.

     From Westpac-Melbourne Institute Index of Consumer Sentiment for December

published Wednesday:

                                        December  November

----------------------------------------------------------

Sentiment Index                            103.3      99.7

Current-Conditions Index                   105.8     101.8

Expectations Index                         101.6      98.3

Family Finances Vs Year Ago                 89.6      84.8

Family Finances Next 12 Months             107.3     105.4

Economic Conditions Next 12 Months         101.1      96.2

Economic Conditions Next 5 Years            96.4      93.2

Good Time to Buy Major Household Items     122.1     118.8

--MNI Sydney Bureau; tel: +61 2-9716-5467; email: sophia.rodrigues@marketnews.com

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