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Sentiment swinging towards confidence for consumers


The holding of the official cash rate earlier this month has enabled a slow move towards consumer confidence in the market, according to new research.

In a joint Westpac and Melbourne Institute ‘Index of Consumer Sentiment’, confidence appears to have risen by 3.6 per cent in the past month, to a figure of 100 in August, from July’s 96.5.

According to the index, 100 points marks the line between optimism and pessimism, and points to a consumer move towards slight optimism.

Westpac’s chief economist Bill Evans said that the holding of the official rates for now, combined with expectations of future easing has helped to restore consumer confidence.


“Realising that lower rates are in the offing but that there is no need for further consecutive changes might be a more encouraging signal for households than a rapid sequence of rate cuts,” he explained.

Despite this, the expectations of future rate relief is also playing a role in the improved confidence.

“Indeed, part of the gain is consistent with firming expectations for additional interest rate cuts,” Mr Evans outlined. 

“The RBA left rates on hold at its August meeting, pausing after the two cuts in June and July but retained a clear easing bias,” the economist indicated.

Housing-related costs have continued to show clear responses to lowering interest rates with both house price expectations and ‘time to buy’ gains recorded for August.

The ‘time to buy a dwelling’ index rose 3.0 per cent to 126.9, comfortably above the long run average of 120 and the highest level since early 2014.

The index noted Sydney and Melbourne as continuing to lead the turnaround, although buyer sentiment posted gains across WA and SA this month.

Despite such improvements, the report did note that buyer sentiment has been notably softer in Queensland, with the state index down 6.4 per cent this month, as well as down 11.6 per cent compared to 12 months previously. 

Sentiment swinging towards confidence for consumers
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Cameron Micallef

Cameron Micallef is a journalist at Nest Egg, writing primarily about personal wealth and economic markets. 

Prior to this, Cameron worked for Australian Associated Press. He graduated from the University of Wollongong with a double degree in communications and commerce.

You can contact him on: This email address is being protected from spambots. You need JavaScript enabled to view it.

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