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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
     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:

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