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ISCOVER
Staff Reporter
The Reserve Bank’s decision to leave the official cash rate on hold did not have a negative impact on consumer confidence, with new research revealing consumers are more confident than they have been in more than two years.
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The Westpac Melbourne Institute Index of Consumer Sentiment rose by 7.7 per cent, from 100.6 in January to 108.3 in February.
Westpac's chief economist, Bill Evans, said the index was the strongest sentiment reading since December 2010 and is the biggest monthly gain since September 2011.
“It follows an extended period in which sentiment has disappointed, posting at best ‘neutral’ readings despite a substantial 175 basis point reduction in interest rates since October 2011,” he said.
According to Mr Evans, the February lift in sentiment comes at a time of fairly mixed economic data.
“The Reserve Bank left interest rates unchanged at its February meeting but signalled it was prepared to lower rates further if necessary. Housing markets continued to show signs of recovery although not a particularly vigorous one. Surprisingly weak retail sales and dwelling approvals data also suggest a weak finish to 2012. Official jobs data in the survey week showed the unemployment rate continuing to hold at 5.4 per cent in January but much of the detail of the report was again soft,” he said.
“Sentiment may have been buoyed by a strong start to the year for financial markets. The ASX rose by 4.8 per cent between the January and February and surveys and is up 13.8 per cent from its mid-November 2012 low.
“News from offshore has also been broadly supportive. All index components recorded gains but the strongest lift in sentiment is around views on the economy,” Mr Evans said.
