Key facts
- Australian consumer sentiment rose 6.0% in August, marking a second consecutive monthly increase.
- The Westpac-Melbourne Institute index of consumer sentiment is still down nearly 10% from a year earlier.
- Pessimists continue to outnumber optimists in the survey.
- The improvement in sentiment was attributed to expectations of lower interest rates.
- Confidence in the economic outlook for the next year increased by 7.6%.
Australian consumer sentiment improved for the second month in August, with the Westpac-Melbourne Institute index rising 6.0% from July. This follows a 4.1% gain in July. Despite the recent increases, the index remains nearly 10% lower than a year ago, and pessimists still outnumber optimists.
The survey indicated that consumers are less concerned about further interest rate hikes, which has bolstered their outlook. Matthew Hassan, Westpac’s head of Australian macro-forecasting, noted that this has reinforced expectations of lower mortgage interest rates, providing a broad-based boost to sentiment.
Specific measures within the survey showed significant gains. Confidence in the economic outlook for the next year jumped 7.6%, while the five-year outlook rose 5.4%. Family finances compared to a year ago improved by 6.2%, and the outlook for the next 12 months picked up by 5.4%. For retailers, the index measuring the suitability of purchasing major household items increased by 4.2%. The measure for buying a dwelling climbed 10.5% to a four-year high, though affordability constraints keep it below the long-run average.