There has been a surge of confidence among consumers, helped by last week’s Reserve Bank interest rate cut, according to a study by Westpac and the Melbourne Institute.
The Westpac/Melbourne Institute index showed consumer sentiment rose by eight per cent in February to 100.7 points, the first time in a year the index was above 100 points indicating there are more optimists about the economy than pessimists.
“This lift in confidence should allay any concerns that rate cuts, in the current environment of record low rates, can be a negative for confidence,” Westpac chief economist Bill Evans said.
However, a different study carried out by ANZ and the Melbourne Institute released yesterday told quite another story, reporting that consumer sentiment had failed to pick up following the rate cut.
“Consumer confidence continues to show a disappointing lack of momentum,” ANZ chief economist Warren Hogan said on Tuesday.
The ANZ-Roy Morgan gauge of consumer confidence eased 0.6 per cent in the past week, remaining below its long-term trend.
The National Australia Bank’s monthly business survey, meanwhile, showed conditions increasingly below their long-run average in January and while confidence edged up, it also remained below average.
NAB economists said the survey painted a story of a soft economy – with rising unemployment – that was in need of a boost.
The survey was taken before last week’s interest rate cut.
“Our view is that the RBA will sit back and watch for a few months to see if more needs to be done,” the NAB said.
Contradictory reports have become the new norm as commentators and analysts struggle to make sense of what is happening in the Australian economy.
– with AAP