House price boom sends consumer sentiment mad macrobusiness.com.au - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from macrobusiness.com.au Daily Mail and Mail on Sunday newspapers.
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Via Bill Evans:
The Index is now just 0.2 points below the December level which was a ten-year high. The main factors driving the Index are improving economic conditions and prospects, both domestically and abroad, particularly as they relate to our labour market.
Australia’s success in containing COVID-19, the promise of vaccine rollouts bringing an end to the pandemic, and support from stimulatory government policies have all contributed to the sustained lift.
However, the survey shows evidence of tensions emerging in the housing market.
Every quarter, the survey includes additional questions around news recall that give a clearer indication of the topics influencing sentiment. Responses this quarter indicate that positive news around the economy, jobs and budget/tax policy have been most influential.
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Via Bill Evans at Westpac:
• The Westpac-Melbourne Institute Index of Consumer Sentiment increased by 1.9% in February from 107.0 in January to 109.1 in February.
This increase in the Index has recouped around half the loss we saw in January when the Index fell from 112.0 in December to 107.0.
Recall that the December print was a ten year high so the bounce-back in February signals that the consumer remains extraordinarily confident.
High confidence amongst consumers is critically important for the economy at this juncture. The Federal government is scheduled to phase out the JobKeeper program at the end of March. It is vital that households, which have built up a very large financial buffer through the pandemic (recently estimated by the Reserve Bank at $200 billion or 15% of pre-pandemic annual income), are prepared to now use that buffer to partially offset the impact on the economy of the withdrawal of support programs.