The Westpac Melbourne Institute Index of Consumer Sentiment rose by 0.6% in January from 100.0 in December up to 100.6 – but the figure is still disappointing, says the research provider.
Westpac's chief economist, Bill Evans, says this is the third consecutive month where the Index has been at or above the 100 level.
“That compares with 14 of the previous 16 months when the Index had registered below 100. However, having said that, it remains disappointing that despite a total of 175bps of rate cuts from the Reserve Bank since October 2011, the Index is only 3.5% above its level at that time.”
The Index surged by 6.4% to 103.4 in November 2011, following the first rate cut in November 2011.
“Consequently, the Index remains 2.7% below the level in November 2011 despite 150 bps of rate cuts from the Reserve Bank. The Reserve Bank Board did not meet in January so there has been no fresh news on the interest rate front since December.”
However, Evans says other factors which would normally have been expected to impact consumer confidence have had ‘little effect’.
“For example, the Australian dollar has risen from USD 1.046 (average over previous survey period) to USD 1.053 (average over current survey period).”
Evans says news from offshore has been generally positive, with sentiment towards China's growth prospects being particularly buoyant.
There has also been encouraging news on the employment front, with the unemployment rate falling from 5.4% to 5.2%.
“Clearly, these positive news events have failed to move respondents.”