By SYDNEY (Reuters) – Australian consumer sentiment rose sharply in November for a second straight month, reaching a 2-1/2-year high with the mood on the economy and finances finally turning optimistic, a survey showed on Tuesday.
The Westpac-Melbourne Institute index of consumer sentiment rose 5.3% in November from October, when it jumped 6.2%. The index reading of 94.6 showed pessimists still outnumbered optimists, but by a narrowing margin.
Indeed, readings for future finances and the economic outlook broke above the 100 mark for the first time since the pandemic.
“Consumers are seeing some further easing in the pressure on family finances, are no longer concerned about the risk of further interest rate rises and are becoming more confident about the economic outlook,” said Westpac Senior Economist Matthew Hassan.
The Reserve Bank of Australia (RBA) again left its interest rates unchanged at 4.35% this month and financial markets are confident the next move will be down, albeit not until next year.
Hassan did caution that survey responses took a turn for the worse after Republican Donald Trump’s won the U.S. presidential election. It was unclear whether this would last.
Otherwise, the survey was broadly firmer as the share of consumers expecting mortgage rates to drop in the future climbed to the highest since 2016.
That was reflected in the survey’s measure of family finances compared to a year ago which surged 6.8%, while finances for the next 12 months rose 4.4%.
The index measuring the economic outlook for the next 12 months jumped 8.7%. The outlook for the next five years rose 6.5% as fears of rate hikes eased.
The “time to buy a major household item” added 3.2% in November, boding well for retailers ahead of the Christmas shopping period.
The time to buy a dwelling index jumped 11.3%, while respondents were also less worried about losing their jobs.