Consumers confident

Sentiment over economy at highest point since 2013

A LEADING measure of Australian consumer confidence has jumped to its highest since late 2013 amid growing optimism on the economic outlook and on the prospect of future promised tax cuts.

A Melbourne Institute and Westpac Bank survey of 1200 people published yesterday showed its index of consumer sentiment climbed 3.9 per cent in July from June, when it rose 0.3 per cent.

The index was up 9.8 per cent on July last year at 106.1, meaning optimists clearly outnumbered pessimists.

The survey was conducted in the week when consumers heard that the Reserve Bank of Australia held its cash rates at a record low 1.50 per cent for a 23rd straight month.

It also followed a pledge by the Federal Government to cut income taxes by $A140 billion over the next seven years, though much of the gains are back-loaded.

“The consumer mood showed a clear improvement in July, driven by growing optimism about the economy,” said Westpac senior economist Matthew Hassan.

The survey’s measure of consumer sentiment over economic conditions for the next 12 months climbed 3.9 per cent, while sentiment for con- ditions in the next five years surged 9.8 per cent.

Measures of family finances also improved, though more modestly. The index of family finances compared to a year ago rose 2.3 per cent, and the outlook for the next 12 months picked up by 2.1 per cent.

The index of whether it seemed a good time to buy a major household item edged up only 1.7 per cent, pointing to

continued caution on spending. “It is still three percentage points below its long run average and well below the levels associated with buoyant spending conditions,” noted Mr Hassan.

Consumers were also guarded on housing with the “time to buy a dwelling” index falling 2.5 per cent in July.

The measure of house price expectations dropped 6.2 per cent, the lowest since early 2016.