Consumer confidence has reached its highest point in nearly three years, with traction from interest rate cuts and the possibility of a Coalition election victory likely factors in Australian consumers’ recovering sentiment.
The result will no doubt bolster the Coalition’s view its election provides the new government with a strong mandate.
Westpac chief economist Bill Evans said the result was “very strong”, and noted it’s the highest point for the index since December 2010.
“If sustained,” he said, “it indicates that the Reserve Bank’s series of rate cuts which began in November 2011 are finally gaining strong traction with households.”
The survey lifted 4.7% in September from 105.7 to 110.6.
The survey was conducted during September 2-8, which includes the federal election. Evans notes responses collected on the last day of the survey showed a “marked lift” in sentiment, although said this was too small a sample to be statistically valid.
“I think it is reasonable to conclude that the election result played an important if not
leading role in this strong boost to consumer sentiment,” he said.
In fact, Evans said the result was comparable to the election in 1996, when the Coalition returned after 13 years in opposition.
“As a further indicator that the election was a significant factor in today’s results we note that over the month the confidence of Coalition voters surged by 19.1% compared to a fall of 10.3% for ALP voters.
“That compared with comparable changes in 1996 of +25.3% and –17.2% respectively when the full result was known for the entire survey.”
The rising sentiment is more due to how people feel about the economy rather than their own finances, the survey found. Respondent confidence for economic conditions over the next five years increased by 7.1%, and the survey tracking whether now is the right time to buy a major household item increased by 6.9%.
The sub-index tracking whether now is a good time to buy a dwelling lifted 6.5% to its highest point since August 2009.
Evans said the Reserve Bank will likely keep rates on hold next month – but softer conditions including employment and actual spending may give the RBA room to move in subsequent months.