Sentiment has continued to recover from the weakness seen in the September quarter last year, bolstered by a less threatening outlook for interest rates and improving confidence around the economy and jobs. While the mood is ‘cautiously optimistic’ rather than buoyant, this is the best monthly index read since late 2013 and the most positive start to a calendar year since 2010.
The consumer mood has posted a clear improvement since the September quarter. The average Index reading over the last three months is 6.3% above the average in July-September last year. That in turn points to some recovery in spending which saw a disturbing slump in the third quarter, a view broadly consistent with recent more positive updates on retail sales and vehicle purchases. However, the degree to which spending improves still looks likely to be constrained with the survey detail suggesting family finances are still under pressure, limited scope for further reductions in saving to support spending, and high debt levels an ongoing concern for many households.
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David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
