Australia Consumer Sentiment Rises Moderately In October

Australia Consumer Sentiment Rises Moderately In October

Confidence among Australian consumers improved marginally in October, a survey by Westpac and Melbourne Institute revealed Wednesday. Nonetheless, pessimists outweighed optimists even after a surprise quarter-point reduction in the cash rate by the central bank early this month.

The headline consumer confidence index increased 1 percent in October to 99.2 from 98.2 in September. A reading below 100 indicates that pessimists outnumber optimists.

According to the report, the most encouraging result from today's survey came from the index tracking views on 'time to buy a dwelling.' The index surged 9.6 percent, reaching its highest level since September 2009.

At the same time, Westpac's Chief Economist Bill Evans termed this as "another disappointing result," There were a number of reasons to have expected the Sentiment Index to have increased by more than only 1 percent, he said.

The index is still significantly below its level of last November following the first quarter-point cut in the cash rate in nearly three years. The score has now remained below 100 for eight straight months. Evans noted that the latest October rate cut was not widely expected and therefore should have registered as a 'pleasant surprise' for respondents. A surprise fall in unemployment rate and positive news from overseas should also have buoyed consumer confidence, he said.

Despite the subdued headline index, three of its five components increased this month. The indices tracking respondents views about their current and future family finances increased during the month.

In a promising sign for retailers, the sub-index tracking views on 'whether now is a good time to buy a major household item' also increased, while weakness centered on views on the economy.

The sub-indices on 'economic conditions over the next 12 months' and on the five year economic outlook declined in October.

The September unemployment data, to be released on Thursday, is expected to show jobless rate rising to 5.3 percent from 5.1 percent in August. The employment is forecast to rise by 5,000 from a month earlier.