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--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
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
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: email@example.com