After a lengthy divergence between consumer sentiment and business confidence in Australia which began in 2014, around July 2018, the two sectors converged again to be largely in line with each other. Currently, both measures are around neutral or slightly negative levels. While the latest reading of consumer sentiment may have moved to a slightly optimistic one, it’s still a little below its long-term average.
According to the latest Westpac-Melbourne Institute survey conducted in the first week of April, average household optimism continued to bounce around neutral levels. The Consumer Sentiment Index moved up to just above 100 once again, this time from March’s reading of 98.8 to 100.7. Any reading above 100 indicates the number of consumers who are optimistic is greater than the number of consumers who are pessimistic. The long-term average reading is just over 101.
Westpac chief economist Bill Evans said, “The survey was conducted over the period April 1 to 5 and captures consumer reactions to the Federal Budget. While the month-to-month rise in sentiment is fairly muted, the survey detail suggests the Budget was well-received.”
Local bond yields finished the day lower, although they may have just moved in line with US changes overnight. By the end of the day, 3-year ACGB yields were unchanged at 1.40%, the 10-year yield had fallen by 3bps to 1.88% and the 20-year had lost 2bps to 2.31%.