Australia’s consumer confidence improved for the second straight month in January to mark its biggest monthly rise since April 2021, as consumers got a temporary boost due to an interval from the Reserve Bank’s rate hikes, although the overall economic picture is still gloomy, survey results from Westpac showed on Tuesday.
The Westpac Melbourne Institute Index of Consumer Sentiment rose 5.0 percent to 84.3 in January from 80.3 in December.
“This is the largest increase in the index since April 2021, and prior to that, since October 2020 when consumers were responding to positive news around the pandemic,” Westpac Chief Economist Bill Evans said.
The survey revealed that the lift in confidence was because January was the first month since April last year that did not see an increase in the RBA cash rate.
The break in the tightening cycle appeared to have provided some comfort, even if that was due to the absence of an RBA Board meeting in the month rather than a deliberate decision by the Bank to leave rates steady.
Westpac expects the Reserve Bank Board to continue with its interest rate policy tightening at its next meeting on February 7.
The survey of 1,200 respondents was conducted over the five days from January 9 to 13.
Among sub-components, consumers’ opinion regarding the economy‘s outlook for the next 12 months strengthened in January, with the sub-index rising to 81.4 from 73.9 in December, and that for the next five years rose from 90.2 to 92.8.
The sub-index reflecting the ‘time to buy a major household item’ gained by 3.6 percent from the previous month to 86.8 in January.
Similarly, the index measuring consumers’ financial situation in the next twelve months improved at the start of the year. The respective index climbed from 87.3 to 93.1.
The measure reflecting confidence in the labor market showed regaining momentum in January. The index of unemployment expectations dropped by 8.4 percent to 108.0.
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