The country’s index of consumer sentiment climbed 4.7 per cent in September from August to 110.6 according to the survey result released by The Westpac Bank and Melbourne Institute today. The survey was conducted from September 2 to 8, ahead of the Coalition victory last Saturday.
The conservative Liberal-National coalition is deemed by many as better able to handle the economy than the outgoing Labor government. At the time opinion polls strongly suggested the Liberal Nationals, led by Tony Abbott, were on course for an easy victory.
According to Westpac chief economist, Bill Evans, “It is reasonable to conclude that the election result played an important if not leading role in this strong boost to consumer sentiment.”
The readings echoed findings from another survey out on Tuesday that showed a sharp rise in confidence in 600 businesses as firms counted on the election to put an end to political uncertainty.
The uptick in consumer sentiment was a sign that record low interest rates of 2.5 % were starting to engineer a pick-up in the economy.
This will come as a relief for the Reserve Bank of Australia (RBA) which has made the decision to cut interest rates in August. The bank has been counting on a revival in consumer and business spending to help plug the gap left by a cooling mining boom.
The survey’s measure of economic conditions over the next 12 months rose 8.7 % in September, while that for conditions over the next five years increased by 7.1 %.
While confidence all-round is clearly rising, much of the real economy still remains in the doldrums. According to The Australian, National Australia Bank’s separate measure of business conditions gained only marginally to -6 from -7.
“Conditions around the labour market, business investment, and actual consumer spending are still soft and the Board will require more time to assess the underlying strength of the economy,” said Evans.