Consumer confidence has extended a “remarkable run of stability” through to October as optimists still slightly outweigh pessimists, according to the latest consumer survey. The October Westpac-Melbourne Institute consumer sentiment index rose from September’s reading of 101.4 to 102.4. Any reading above 100 indicates the number of consumers who are optimistic is more than the number of consumers who are pessimistic.
Westpac’s chief economist Bill Evans pointed to one segment of the survey which stood out. “The Current Conditions components of the Index have been steady while the Expectations components of the Index are up 8.1% on the previous year…The largest average boost of the components has been the outlook for the economy over the next 12 months.” He put it down to stable labour market conditions and pointed to a drop in the Unemployment Index which indicated a marked improvement in employees’ views of labour market conditions.
The result was not a surprise to financial markets although the AUD rose marginally against the major currencies on the day and the probability of a February rate cut fell from 26% to 20%. Bond market yields were already up before the figures were released on the back of large rises offshore. By the end of the day the 3 year bond yield was 5bps higher at 1.71% and the 10 year rate was up 6bps at 2.28%.