Consumer confidence delivers record rise

Posted on 9/07/2009  

Consumer confidence has risen to its highest level in 18 months, following a two-month improvement which is the highest recorded.


The Westpac/Melbourne Institute index of consumer sentiment rose 9.3% this month to 109.4 points, compared with 100.1 point in June. This means optimists have decisively out-numbered pessimists for the first time since December 2007 and follows the June result, which represented the second largest monthly rise since the survey was started in 1974.


The July index reading is 38.5% above the result of July 2008 and 23.2% higher than the May index result – the largest two-month rise since the survey began.


Westpac chief economist Bill Evans describes the outcome as “a stunning result”. He says the reasons for the surge in confidence include relief that Australia has avoided a technical recession, government stimulus measures and the “unexpected resilience” of the labour market.


The index has risen from 88 to 109 since the Federal Budget was delivered in May.


The July survey found that optimists outnumber pessimists in every income group, every occupational group and every category of home ownership. Labor voters are particularly optimistic, with Coalition voters the most pessimistic group.


Other measures that indicate rising consumer confidence include the rise in home loan commitment in May, the eighth consecutive monthly rise, and continuing strong data on retail spending.


Meanwhile, a survey of business executives by the Australian Chamber of Commerce and Industry found a significant rise in expectations for the September Quarter. The index rose to 54.5, the highest level in 12 months.



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