Australia | Jul 08 2009
By Rudi Filapek-Vandyck
The Westpac Melbourne Institute Consumer Sentiment Index increased by 9.3% in July from 100.1 in June to 109.4 in July.
Westpac economists, in reaction to the July outcome, talk about “unquestionably a stunning result”. Last month had already generated the second largest increase in the Index since Westpac and the Melbourne Institute started measuring the Index in 1974.
The Index has now printed an increase of 23.2% over the last two months. The economists point out this the largest two month increase in the Index since the survey began in 1975. Tt is also the largest increase by a substantial margin, as the second largest two month increase was 18.8% in March 1992 when households were finally convinced that the Australian economy was coming out of recession.
The Index has now reached the highest level since December 2007 – 38.5% above its level a year ago and at 109.4 optimists decisively out-number pessimists for the first time since December 2007.
In trying to explain July’s “stunning result”, Westpac economists suggest it appears the first tranche of the Australian government payout may have been too narrowly based. Maybe those receiving the payments were initially cautious given the avalanche of disturbing information associated with the global financial crisis, the economists ask. They add no such criticism can be levelled at the second tranche. It has now been almost fully disbursed and has resulted in an instant boost to retail sales and supported an apparent surge in confidence.
Maybe the unexpected resilience of the employment figures has also played a role? The economists also note that over the last two months the unemployment rate has remained steady. As of June, the Westpac-Melbourne Institute measure of job security has improved by 12% since its low in February, although it is still 20% lower than a year ago, say the economists.