A STRONG reading for consumer sentiment shows Australians could finally be feeling the benefit of several interest rate cuts.
The Westpac Melbourne Institute Index of Consumer Sentiment for November, released today, has risen by 5.2 per cent to 104.3 per cent.
A reading below 100 indicates more consumers are pessimistic than optimistic about the economy.
Westpac chief economist Bill Evans said the result was unexpectedly positive, given sluggish performance in previous readings.
“This is a welcome and surprisingly strong result,” he said. “The index has reached its highest level since April 2011.”
“After a long 16-month period when it held below 100 for 14 of those months, we are finally starting to see that the Reserve Bank’s 150 basis points of interest rate cuts is having an impact.”
He said, though, that it was still only 0.9 per cent above its level this time last year.
Mr Evans said the uptick in sentiment was most likely based on global factors, as well as the RBA’s rate cutting decisions in May, June and October.
The central bank’s decision not to cut again on November 6 seemed to have had little impact, he said.
All components of the data improved in November, with a rise of 11.1 on the sub-index measuring views on family finances compared to a year ago, and a rise of 1.3 per cent on the measure of expected family finances over the next 12 months.
Australians were also positive about economic conditions over the next 12 months and five years, with the relevant sub-indexes improving by six per cent and 3.4 per cent respectively.
The sub index tracking whether now was a good time to purchase a major household item rose 5.1 per cent.