Don’t panic! Consumers more confident than any time since rates started rising
By Poppy Johnston in Canberra
Consumers are feeling their most upbeat since the Reserve Bank of Australia first started hiking interest rates.
Consumer sentiment has reached a two-and-a-half-year high as fears of further interest rate increases subside and cuts start in other nations.
The headline index from Westpac and Melbourne Institute – capturing consumer responses to questions about their finances, the economy, and appetites for buying major household items – rose to 89.8 in October, from 84.6 in September.
Westpac head of macroeconomic forecasting Matthew Hassan said consumer moods had been buoyed by interest rate cuts abroad and more promising signs that inflation was moderating locally.
“However, responses around family finances suggest progress on cost-of-living pressures – the main source of negative sentiment reads overall – is still slow,” he said.
In September, Australia’s central bank left interest rates on hold at 4.35 per cent, an elevated level designed to take heat out of the economy and stop prices rising so quickly.
The RBA continues to rule nothing in or out when it comes to its next cash rate moves, but Governor Michele Bullock indicated the September meeting was the first time since March the bank’s board did not explicitly consider lifting rates.
Other nations, including the United States, Canada and New Zealand, have already started reducing interest rates.
Monday’s Australia Melbourne Institute Inflation gauge revealed a modest 0.1 per cent lift in September, taking the annual rate to 2.6 per cent.
The official count from the Australian Bureau of Statistics for August had the headline inflation rate back at 2.7 per cent, within the RBA target band for the first time since August 2021.
The central bank is focused on underlying price pressures and is waiting for quarterly data on inflation, which is less volatile than the bureau’s monthly measure.
In promising news for job hunters, a separate measure of ad numbers has recorded it first gain in eight months.
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ANZ and Indeed have been recording a steady decline in job ads since 2022, with the series down 15.8 per cent since January.
September’s 1.6 per cent increase adds to the narrative of broader labour market resilience, with employment tracking higher, underemployment holding at low levels and annual growth in hours worked at an 11-month high.
Indeed senior economist Callam Pickering said the retail sector contributed more than a third of the non-seasonally adjusted jump in job adds, reflecting the boost as stores hire more workers for Christmas.
“Overall, job ads in September rose in three-quarters of occupations, compared to half in August, indicating that gains were relatively broad-based,” he said.
