The Westpac-Melbourne Institute index of consumer sentiment jumped 9.4% in April to the highest since June last year, after staying flat near 30-year lows the month before.
The index reading of 85.8 still meant pessimists outnumbered optimists, and was down 10.4% from April last year just before the Reserve Bank of Australia embarked on its most aggressive tightening cycle in modern history.
"This strong recovery in the Index can be largely attributed to the decision by the Board of the Reserve Bank to break the sequence of ten consecutive meetings when the cash rate was increased by deciding to pause at the April meeting," said Westpac chief economist Bill Evans.
"Despite this lift in April, we still characterise Consumer Sentiment as weak and consistent with Westpac's view that consumer spending through 2023 and at least the first half of 2024 will be lacklustre." The survey was conducted in the week when the RBA paused its rate hikes for the first time since May last year, leaving rates at 3.6%, to assess the tightening impact so far.
Markets suspect rates hikes are essentially over and have priced in a cut of about 15 basis points by the end of this year. Confidence in the outlook for house prices has surged, with the index up by 16.7% in April, and the mood for respondents with a mortgage also lightened up, with the index jumping 12.2% to be down 14.6% from a year ago.
The Westpac measure of whether it was a good time to buy a major household item rebounded 8.2%.
The index of the economic outlook for the next 12 months jumped 16.5%, although the outlook for the next five years just rebounded 0.7%.
The survey's measure of family finances compared with a
year ago jumped 10.5%, while the outlook for finances over the
next 12 months also surged 12%.
(Reporting by Stella Qiu; Editing by Kim Coghill)
