Consumer sentiment at 10-year high

Aussies are upbeat about the future of the economy, with consumer sentiment improving markedly as the nation opens back up.

Australian consumer sentiment has hit a 10-year high. Picture: NCA NewsWire/James Gourley

Australian consumer sentiment has hit a 10-year high, with evidence suggesting the country has dodged the full impact of the coronavirus pandemic.

The latest Westpac-Melbourne consumer sentiment index has lifted 4.1 per cent in December to 112, the highest the leading indicator has been since the economy rebounded from the impacts of the global financial crisis in 2008.

Westpac chief economist Bill Evans said the index was 48 per cent above where it was when the pandemic shut down the nation eight months ago.

Mr Evans said the promising news around vaccines and the new jobs had lifted sentiment across the economy.

“Domestic news was viewed much more favourably — nearly half of consumers viewed news on the economy as favourable, compared to just 19 per cent three months ago,” Mr Evans said in his report.

“News around jobs was still assessed as downbeat overall but much less downbeat than back in June.”

Westpac chief economist Bill Evans says the index is 48 per cent higher than where it was eight months ago. Picture: Britta Campion/The Australian

The brighter outlook also coincides with data released by the Australian Bureau of Statistics, which found the number of jobs in the September quarter increase by 2.2 per cent, or 303,400 new positions.

“The improvement in the labour market seen in the September quarter Labour Account data echoes the recovery seen in other indicators, such as the Labour Force Survey and payroll jobs data,” ABS head of labour statistics Bjorn Jarvis said.

“(Wednesday’s) data provides a picture of the extent of recovery across industries in the labour market, following the release of the national accounts last week.”

Westpac noted while consumer sentiment was upbeat for the domestic recovery, 80 per cent of respondents looked unfavourably upon the international response to the virus, largely due to deteriorating conditions in Europe and the US.

ABS data has shown jobs in September quarter rose 2.2 per cent. Picture: NCA NewsWire/Daniel Pockett

Mr Evans said there were more families in a worse position financially this month than those who had seen an improvement.

He said the gain in sentiment came despite the tapering of federal government stimulus, such as the JobSeeker and JobKeeper payments.

Westpac’s index, which surveys 1200 adults, found the eagerness to buy a property had eased off last month’s seven-year high, primarily due to prices in key housing markets now lifting.

Mr Evans said there was still “clear optimism” around house prices, however evidence suggested Australians were risk averse in their financial decisions.

“Results show consumers continue to favour safe options,” Mr Evans said.