The most widely-watched consumer sentiment survey has jumped 6.4 per cent in May following an interest rate cut and the federal budget. The Westpac-Melbourne Institute index hit 102.4, which indicates that optimists narrowly outnumber pessimists – it is the first positive reading since February. Consumer sentiment is now running around long run averages.
The findings back up yesterday’s release of the weekly ANZ-Roy Morgan consumer confidence index, which was up 3.6 per cent last week, following the budget, building on a gain the previous week after the Reserve Bank cut official interest rates again to a record low 2 per cent.
Two days of the six-day survey period were conducted before the budget release, but many of the main measures had been announced or leaked ahead of the Treasurer’s speech. In the May survey respondents were asked specifically about how the budget would affect their household finances, and Westpac’s chief economist Bill Evans said the response was much better than last year.