Australia | Mar 14 2007
By Rudi Filapek-Vandyck
The Westpac/Melbourne Institute Index of Consumer Sentiment rose by 3.7% in March from 111.4 in February to 115.5. The Index is now 3.6% above its level of a year ago despite three interest rate increases in 2006. Westpac reports March represents the highest level of the Index since August 2005, 10.9% above the average level in 2006.
Westpac economists draw the conclusion that the overall clear message from the media and analysts that Australian interest rates are likely to be on hold for some time appears to have buoyed consumers. In particular, the economists note, the confidence of mortgagees has jumped by 8.5% from its level a year ago.
In adition, unemployment in Australia is at a 31 year low.
Westpac adds a third, politically inspired factor: possibly encouraged by recent polls, ALP supporters’ confidence has jumped by 8.7% since the February survey, whereas Coalition supporters’ confidence has been stable.
Other points of interest are that confidence in buying a dwelling was down by only 0.5% from December, having fallen by 12.8% over the course of 2006. But, Westpac points out, real estate continues to lose its attraction as an investment vehicle with only 16.7% of respondents seeing real estate as the wisest place for savings. This was 20.3% a year ago and 24.1% two years ago.
20.4% of respondents said paying down debt was the wisest form of savings compared to only 10.5% a year ago.
All components of the Index increased in March.