Consumer sentiment rose in September but still remains weak despite several interest rate cuts, according to the latest results of the Westpac Melbourne Institute Index of Consumer Sentiment.
The index rose 1.6% to 98.2 in September, from 96.6 in August.
Westpac chief economist Bill Evans said the index has now come below 100 for the seventh consecutive month, a result only surpassed by a 16-month stretch from 2008 to 2009.
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“The consumer is clearly stuck in an extended ‘cautiously pessimistic’ phase. In September last year the Index printed 96.9 so it has only increased by 1.3% over the whole year,” Evans says.
“That is despite 125bps of rate cuts from the Reserve Bank; a more or less steady unemployment rate which is close to full employment; and some recent positive news around the threatening European situation.”
Evans says the result is not a good sign for consumer spending.
“Although this followed a strong March quarter rise, the softening has come despite major policy boosts to household incomes including $1.9 billion in fiscal handouts.”
“With a sharp fall in July retail sales confirming this boost is now reversing, underlying momentum appears to be soft, in line with the consistently downbeat signal from the Consumer Sentiment Index.”
Housing starts lift in June quarter
Housing starts rose in the June quarter, according to the latest figures from the Australian Bureau of Statistics.
The figures show total starts in the three months to June 30 rose by a seasonally adjusted 4.6% to 34,116 units. Analysts had only expected a rise of 2.7%.
The figures come after starts dropped by 12.6% in the previous quarter.
Sharemarket higher on positive offshore lead
The Australian sharemarket has opened higher this morning following a positive offshore lead.
The benchmark S&P/ASX200 index was up 35.3 points or 0.8%, while the Australian dollar jumped to $US1.04 overnight based on a surge in iron ore prices.
In the United States, the Dow Jones Industrial Average rose 69 points or 0.5% to 13,323.4 after speculation the Fed would make a move on monetary stimulus.