REPEAT:MNI ANALYSIS:Australia Consumer Morale Up, Finance Weak

Repeats Story Initially Transmitted at 23:42 GMT Oct 10/19:42 EST Oct 10

--Westpac-MI Consumer Sentiment Index Rises Above 100; Highest Since October

--Consumers' View on Own Finance, Key Spending Indicator, Weak Despite Rise

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

survey rose unexpectedly in October, likely reflecting reactions to consistent

reports of an improving global economy and easing worries that interest rates

locally could rise.

     However, a key element of the survey that has significant correlation with

consumer spending -- consumers' view on their own family finances -- remained

weak, and that could be a key factor keeping the Reserve Bank of Australia's

monetary policy on hold for longer. 

     A continued downbeat views on the housing market is another area of worry,

though offsetting this may be improved expectations on the labor market.

     Data published by Westpac-MI Wednesday showed consumer sentiment rose about

100 for the first time since November last year, to the highest level since

October. All sub-indexes rose in October, with the biggest gain seen in economic

conditions in the next 12 months.

     But the view on family finance versus a year ago remained a weak spot, with

the sub-index at only 83.7 even after a 1.0% m/m rise in the latest survey.

     Consumer views about  the housing market remained downbeat with the "time

to buy a dwelling" index down 0.2% to 95.1, falling further below the long-run

average of 120. Expectations for house prices also softened, down 1% m/m to

140.5.

     On the other hand, expectations for the labor market continued to improve.

The Westpac unemployment expectations index fell 3.3% to 129.2 in October,

marking the lowest reading since June 2011. This view was also reflected in the

overall sentiment index, as confidence among "trade" workers was particularly

strong, up 22% in October, reflecting more work opportunities due to residential

building and infrastructure spending.

     Westpac chief economist Bill Evans said the key to the interest rate

outlook remains the consumer and the housing market. "While today's report shows

a welcome boost in consumer confidence, most of the strength is centred on the

one year economic outlook. Respondents remain concerned about their own finances

despite an expectation that the economy overall will improve. As we saw in the

data for retail sales in August, consumer assessments of family finances, which

have been downbeat for some time, are likely to be a more reliable indicator of

actual spending than their views on the general economic outlook."

     From Westpac-Melbourne Institute Index of Consumer Sentiment for October

published Wednesday:

                                        October  September

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

Sentiment Index                           101.4       97.9

Current-Conditions Index                  102.3      100.7

Expectations Index                        100.1       96.0

Family Finances Vs Year Ago                83.7       82.9

Family Finances Next 12 Months            102.4       98.3

Economic Conditions Next 12 Months        102.6       95.8

Economic Conditions Next 5 Years           95.2       93.9

Good Time to Buy Major Household Items    122.8      118.5

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

[TOPICS: MTABLE]