The Westpac-Melbourne Institute index of consumer sentiment increased to 101.7 in November from the October recording of 97.8. The rise in the index indicates an increase in the ratio of optimistic consumers to pessimistic consumers and it follows on from of October’s rise. A reading above 100 means there are more positive responses from people in the survey than negative ones.
Bill Evans, Westpac’s chief economist, described it as a “cracking result” and he went on to say, “It marks only the third month out of the last twenty one that optimists have outnumbered pessimists”.
In spite of the banks’ decisions to raise mortgage rates, the confidence of respondents who hold a mortgage increased by slightly more than the increase in the overall index. Individual components of the index suggest people in the survey may be concerned about their personal finances but these concerns are being outweighed by a generally positive view of the overall economy. While the survey indicates more people think unemployment will rise in the year ahead, the unemployment component of the index remains 10.9% below the September level, which indicates people are generally less pessimistic about their employment prospects than they have been for some years.
All this leads the chief economist to say growth in the Australian economy “will remain sufficiently supportive through 2016 to ensure steady rates.”
Domestic bond markets may have already priced the news in as the 3 year bond futures yield fell 2bps to 2.03% while the 10 year bond futures yield also closed 2bps lower at 2.90%.
