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The Westpac-Melbourne Institute Index of Consumer Sentiment surged an unexpected 7.5 per cent this month.
The index now stands at 92 – 12.1 per cent higher than just two months ago and 16.4 per cent above its lowest point this year.
Bill Evans, Westpac chief economist, said such a significant jump was somewhat surprising as the gloom surrounding the global economy “could have easily overwhelmed the positives” – those being the further rate reduction, falling petrol prices and the recent improvement in the sharemarket.
Borrowers’ confidence levels also surged by 11 per cent in December as did the Index’s time-to-buy-a-dwelling index which reached its highest level since 2002.
With weak consumer sentiment the greatest risk to the economy, the results of the index are indeed welcome news.
Earlier this week BIS Shrapnel warned that the economy was relatively safe from recession but poor consumer and business confidence could see Australia talk itself into one.
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