Matthew Hassan
The Westpac–Melbourne Institute Consumer Sentiment Index rose 2.8% to 85 in August from 82.7 in July.
Westpac Senior Economist Matthew Hassan said: “Consumers breathed a small sigh of relief in August as the RBA Board left interest rates unchanged and the support coming from tax cuts and other fiscal measures became more apparent. That said, the Index remains at weak levels by historical standards, stuck in the 78–86 range that has prevailed for over two years now. The survey detail shows that cost of living and rate rise concerns are still weighing heavily.
“The component indexes show a clear improvement in the latest sentiment data, centred around family finances.
“The ‘family finances vs a year ago’ sub-index surged 11.7% in August, the biggest monthly gain in nine years (excluding the COVID period) lifting the sub-index to 70.9 – a two-year high, albeit still a very weak level overall. The monthly rise was particularly strong amongst low-income earners; 18–34 year olds and those aged over 65; and in South Australia, Queensland and Victoria.
“Consumer expectations for their finances also improved, with the ‘family finances, next 12 months’ sub-index rising 5.1% to 96.8. This is the highest level since the interest rate tightening cycle began in May 2022.
“While these monthly moves are impressive, both ‘family finances’ sub-indexes were coming off sizeable declines and extremely weak levels in July. Even with these gains, the August reads on both sub-indexes were still in the bottom 15% of monthly readings since the series began in the mid-1970s.”
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