Sentiment Turns Positive At Last

Australian consumer sentiment has shifted into net positive territory for the first time in four years, signalling growing confidence but also complicating the case for near-term rate cuts.

The Westpac–Melbourne Institute index surged 12.8 per cent in November to 103.8, meaning optimists now outnumber pessimists.

Economists link the turnaround to this year’s three rate cuts, stage 3 tax cuts, and milder inflation, even as underlying inflation sits at 3 per cent and is not forecast to return to the 2–3 per cent midpoint until 2027.

Westpac’s Matthew Hassan called the result “extraordinary,” noting clear signs of momentum in both consumer demand and the housing market, with over 80 per cent of respondents expecting prices to rise over the next 12 months, led by South Australia and Queensland.

However, other indicators are less bullish, with the ANZ-Roy Morgan survey not showing the same upswing and current conditions still soft.

For now, stronger sentiment is positive for housing and spending, but likely keeps the RBA cautious and the cash rate on hold.