The Westpac-Melbourne Institute Index of Consumer Sentiment lifted 2.5% in November. It followed an 11.9% increase in October with the index now 35.3% above its level in August and 13% above the average over the six months prior to the economy wide shut-down in March.
Westpac chief economist Bill Evans described it as “another strong result”.
While the survey was conducted before the second round of easing restrictions had been announced for Melbourne, and the state’s recent success in containing the virus, expectations for this second round were buoyant. “It also preceded the recent encouraging developments around Pfizer’s coronavirus vaccine,” Evans said.
Among the major states the stand-out was Victoria where confidence surged 9%, although it fell 5% in NSW following the spectacular 17.5% jump last month.
Every November since 2009 survey respondents have been asked an additional question about their Christmas spending intentions. “Specifically, we ask them whether they plan to spend less, the same or more on Christmas gifts than the previous year and results over the last five years have been remarkably stable,” Evans said. “For 2020 the net balance is -20.8%, around the long run average since 2009. Given the high degree of uncertainty this Christmas, and the headwinds from the high unemployment rate, it is an encouraging sign that Australians are planning for a ‘normal’ Christmas.”
The prospects for further strengthening in sales of household goods also received a boost with a 6.7% increase in the ‘time to buy a major item’ sub-index moving to its highest level since August 2019.
According to Evans, the main message from this survey is the encouraging optimism which is building around the outlook for the housing market. “The key issue for the sustainability of this recovery in the housing market will be whether the l headwinds will represent a sufficient drag on the progress which can be expected by the absence of the usual constraint – a rising interest rate.”
ANZ-Roy Morgan data also reflected the lift in consumer confidence with the index rising for a tenth straight week, up 3.2%. And driving this week’s increase was that more Australians say now is a ‘good time to buy’ major household items, with the indicator increasing 6% to reach its highest level for nearly six months.
ANZ head of Australian Economics, David Plank said consumer confidence is now above the neutral level for the first time since the pandemic began, posting an eight-month high. “The sharp improvement in major household item buying intentions could signal a buoyant Christmas shopping period. Lower interest rates and the Reserve Bank commitment to support employment could also have been triggers for the gain,” Plank said.