Consumer confidence surges on back of interest rate cut
The Reserve Bank's first rate cut since 2020 has delivered a welcome boost to the economic outlook, but Australian consumers are still more pessimistic than optimistic.
The Westpac-Melbourne Institute consumer confidence survey posted a strong four per cent gain in March, up to a three-year high of 95.9.
Slowing inflation and good news on interest rates drove the bounce in sentiment following a slowdown in recovery over the Christmas-New Year period, said Westpac's head of Australian macro-forecasting, Matthew Hassan.
"The RBA's decision to cut interest rates in February and a further easing in cost-of-living pressures have provided a clear lift," Mr Hassan said on Tuesday.
"The survey detail shows a broad-based improvement with a notable rise in confidence around the labour market outlook."
Mortgage holders recorded the largest jump in confidence, while the outlook also improved for people planning to buy a home.
Expectations of the time it takes to buy a dwelling eased, although expectations that house prices would rise also grew.
It came as the Australian Bureau of Statistics revealed the value of Australian homes rose to a fresh record high, although the rate of growth was slowing.
The value of Australia's 11.3 million residential dwellings rose 0.2 per cent to $11 trillion in the December quarter, despite a short slowdown in the housing market.
"The relatively flat growth for the December quarter was the result of net additions to stock offsetting a slight fall in property prices," said ABS head of finance statistics Mish Tan.
"Annually, growth slowed to 4.4 per cent from 8.1 per cent in December quarter 2023."
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Another four per cent improvement in April would bring the Westpac-Melbourne Institute consumer sentiment index back to 100, which would denote an equal amount of optimists as pessimists.
But concerns still persist, most notably in the form of unsettling news from overseas.
"While it is not the most pressing concern, the US 'tariff war' and deteriorating relations with some of its allies is clearly unsettling," Mr Hassan said.
Ex-tropical cyclone Alfred is also weighing on the mood of some consumers.
Brisbane defied the rising national trend to record a 1.7 per cent decline in sentiment.
Meanwhile, business confidence declined into negative territory in February, according to NAB's business survey.
That came despite a boost in profitability and trading.
Conditions improved the strongest in mining and construction, while the wholesale, manufacturing, finance, property and retail industries suffered a decline.
"Activity measures in the survey continue to point to below average growth," said NAB chief economist Alan Oster.
"Cost pressures are a step above output price growth pointing to the ongoing challenges in the business sector even though economic activity showed some improvement in H2 2024."
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