Australian consumer confidence highest in two years

Wednesday 14th October 2009

Australian consumer confidence rose to a two-year high, adding to signs the economy is picking up steam and creating more jobs after skirting the global recession.

The Westpac Banking Corp. and Melbourne Institute sentiment index rose 1.7% to 121.4 points this month. Helping to lift the mood of consumers, Australia’s jobless rate unexpectedly fell to 5.7% last month while the economy stacked on jobs, easing concern that unemployment would be a long and painful tail to the downturn.

The resilience of the labour market “has strengthened householders’ convictions that their jobs are safe,” said Bill Evans, Westpac’s chief economist. He said it was significant that consumers grew more confident even after the Reserve Bank of Australia raised its benchmark interest rate.

RBA Governor Glenn Stevens raised the key rate a quarter point to 3.25% this month, becoming the first central bank official among the Group of 20 nations to tighten monetary conditions in response to signs the global economic slump is abating. He said the RBA now saw it as prudent “to begin gradually lessening the stimulus provided by monetary policy,” according to his October 6 statement.

Economists expect he will raise rates a further quarter point on November 3. Consumer confidence about the economy’s track over the next 12 months rose 5.7% though on a five-year view, confidence eased 2.6%, according to the confidence report.

Those consumers deeming now a good time to buy a house fell 11% to the lowest level in 11 months, which may indicate Australians still feel constrained with their own finances.

The Westpac-Melbourne Institute survey was taken between October 5 and October 11.

Businesswire.co.nz

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