The Westpac-Melbourne Institute Survey released on Wednesday showed a 6.40 per cent rise in the consumer confidence in May. The survey’s main index rose to 102.4 points after falling in both March and April. The index has not risen above 100 points since January earlier in the year. The rise in consumer confidence was attributed to the positive sentiment surrounding the Commonwealth budget and the recent interest rate cut, which helped cheaper credit flow into the economy.
Westpac chief economist Bill Evans noted that compared to previous corresponding periods, consumer confidence usually fell. “In recent times the index has, typically, fallen in May, with the budget usually the key explanation," he said. "The surge in the Index this year represents the first time we have had a strong result in May since 2007.” The data from the Westpac-Melbourne survey was in line with other recent data, including the weekly ANZ-Roy Morgan survey. ANZ said yesterday that weekly confidence rose 3.60 per cent on the back of the Commonwealth Budget.
Both the Westpac and ANZ surveys showed a significant change in sentiment surrounding the budget. Last year, both surveys showed a drop in confidence after the release of the 2014 Budget. In the Westpac-Melbourne survey, the largest rise in confidence came in the “economic conditions over the next five years” and “over the next 12 months” categories, which were up 20.2 and 9.2 per cent respectively. These categories represent the public’s approval of the Budget. Mr. Evans noted that although some of the boost in confidence came from the recent interest rate cut, the majority of lift is attributable to the Budget.
Author: Matthew Dibb
May 20, 2015
Matthew has an extensive track record in equity markets and derivative advisory. Spanning a career in several investment banks and prviate wealth groups including Macquarie Bank, his specialist knowledge relates to capital market advisory and equity market analytics. Matthew has a diploma in Financial Advisory, Applied Finance and is ADA 1 & 2 accredited.