Summary: Household sentiment improves again in April; highest reading since 2010; sentiment index well above long-term average; four of five sub-indices higher; unemployment index higher.
After a lengthy divergence between measures of consumer sentiment and business confidence in Australia which began in 2014, confidence readings of the two sectors converged again around July 2018. Both readings then deteriorated gradually in trend terms, with consumer confidence leading the way. Household sentiment fell off a cliff in April 2020 but, after a few months of to-ing and fro-ing, it then staged a full recovery.
According to the latest Westpac-Melbourne Institute survey conducted in early April, household sentiment has improved again, taking it to an elevated level. The Consumer Sentiment Index rose from March’s reading of 111.8 to 118.8.
“This is an extraordinary result. The Index is now at its highest level since August 2010 when Australia’s post-GFC rebound and mining boom were in full swing,” said Westpac chief economist Bill Evans.
Any reading of the Consumer Sentiment Index above 100 indicates the number of consumers who are optimistic is greater than the number of consumers who are pessimistic. The latest figure is substantially above the long-term average reading of just over 101.
Long-term Treasury bond yields fell following noticeable falls in US Treasury bond yields overnight. By the close of business, the 10-year ACGB yield had dropped by 7bps to 1.71% while the 20-year yield finished 6bps lower at 2.42%. The 3-year yield remained unchanged at 0.26%.