Low interest rates and rising house prices are boosting consumer confidence but Australians are growing more concerned about their job security.
Consumer sentiment increased by 1.9 per cent to 110.3 points in November, from 108.3 in October, according to the Westpac Melbourne Institute Index of Consumer Sentiment.
The survey was conducted in the first week of the month when the Reserve Bank left the cash rate on hold at 2.5 per cent and strong house price data was released, Westpac chief economist Bill Evans said.
This saw a rise in the confidence of people who wholly own their own house but a drop in confidence among renters, Mr Evans said.
Employment figures were also released last week, but although the unemployment rate held at 5.7 per cent in October, the report overall was weak and dented employment confidence, he said.
“Over the four months to October, the economy actually lost 42,000 full-time jobs,” Mr Evans said.
“The unemployment rate did not rise over that period only because workers have been voluntarily leaving the work force altogether, likely, in part, because they feel discouraged in their job search.
“In effect, despite the Reserve Bank reducing interest rates by 225 basis points since November 2011 and consumer sentiment increasing, respondents are more concerned about the outlook for unemployment and, by implication, their job security, than they were two years ago.”
Mr Evans said another cash rate cut was needed, but the Reserve Bank would have to wait for more data before acting.
“Some of the big issues for policy are around a very strong housing market in some regions of the country, particularly in Sydney, and very soft job markets,” Mr Evans said.
“The Reserve Bank is clearly positioned to await developments in these areas over the course of the next few months.
“For our part, we believe the prudent decision would be to ease rates further but not before more data is available.”