As we head towards Christmas more positive news arrives, with consumer sentiment lifting strongly in November.
The Westpac Melbourne Institute Index of Consumer Sentiment increased by 5.2 per cent in November from 99.2 in October to 104.3 in November – reaching its highest level since April 2011.
Westpac's chief economist, Bill Evans, has welcomed the surprisingly strong results.
“After a long 16 month period when the Index held below 100 for 14 of those months we are finally starting to see that the Reserve Bank's 150bps of interest rate cuts is having an impact.
“However, to put this result into perspective, the Index is still only 0.9 per cent above its level of November last year following the first 25bp cut from the Reserve Bank. In effect, the subsequent 125bps of rate cuts have only really now been successful in holding the Index at that level which we reached in November last year.”
According to Westpac, factors that continue to contribute to the unnerving confidence among consumers include the RBA’s recent decision to hold rates, the extensive coverage around the vulnerabilities of Australia's mining boom and unemployment rate not increasing, despite extensive media speculation of a weak result.
“With households more confident around their finances and more positive around their spending intentions than last year this November result should be of some comfort to retailers that the critical Xmas spending period will show some improvement on last year,” Evans said.