The Westpac-Melbourne Institute Consumer Sentiment Index has just been released for August and the news is very good with an increase of 3.7 per cent, its highest level in two years.
According to the report the Index is now at 113.4 compared to 109.4 for July, Matthew Hassan, Westpac senior economist commented on the results.
“The rise extends what had already been an extraordinary rally in confidence over the previous two months. The index is now up 27.8 per cent since May, the biggest three month gain since the survey began in 1975, and by a wide margin,” he said.
“The Index is now up a staggering 43.6 per cent from its 2008 low, to its highest level in nearly two years. Remarkably, sentiment is now just 1.6 per cent below its 2007 average.”
Hassan attributed the impressive result on two major factors: the official ABS figures showing housing prices rose 4.2 per cent in the June quarter and the strong July Labour market result, which showed an unexpected rise in employment and the unemployment rate stabilising at 5.8 per cent.
“These two pieces of news helped alleviate two of the biggest sources of consumer anxiety over the last year: fear of losing money on their biggest single asset – the family home – and fear of losing their jobs,” he said.
“The message is clear, as far as consumers are concerned, that the worst of the current downturn appears to have passed.”