RTTNews - Consumer confidence In Australia rose to near two-year high in August, indicating that the worst of the current downturn may have passed, the latest report from Westpac and Melbourne Institute showed Wednesday.
In seasonally adjusted terms, the confidence index moved up to 113.4 in August from 109.4 in the preceding moth, well above the threshold level of 100 that separates the pessimists from the optimists.
The index rose 3.7% month-on-month in August, and was up 27.8% since May, marking the sharpest three-month rise since the survey began in 1975. Also, the index climbed 43.6% from its 2008 low, to its highest level in nearly two years.
Westpac cited two factors behind the rise in consumer confidence in August. Firstly, house prices climbed 4.2% in the June quarter, according to official report, indicating that prices have gained back their ground since the start of last year, and dispelling fears that they could be headed for double-digit falls as seen elsewhere.
The other positive news came from the labor market in July, with the unexpected rise in employment and the stabilization of the jobless rate at 5.8%.
In the meantime, all components of the confidence index showed a rise in August. Consumers' view on the economic outlook showed the biggest improvement, with the index of expected economic conditions over the next 12 months climbing 11.2% after a 19.6% rise in July, and up by more than 113% since March. Consumers' opinion about the economic conditions over the next five years climbed moderately by 0.9%, but the index remained at an all-time high of 123.1
Consumers' assessment about their own finances compared to a year ago increased 1.3%, but the index at 82.8 remained well below the threshold level.
Fiscal injections and interest rates cuts have not been enough to fully offset the hit to household finances over the last year from weakening labor markets, falling equity markets and patchy house prices, Mathew Hassan, Senior Economist with Westpac said.
Expectations about family fianances for the next 12 months increased, with the index rising 3.3%. The indicator measuring whether it was a good time now to buy durable goods also showed an improvement, rising 2.2% in July, hitting its highest levels since mid-2007. Other indicators including a good time to buy a dwelling and time to buy a car also showed improvements, rising 1.6% and 3.1% respectively.
Meanwhile, a report released earlier in the day by the Australian Bureau of Statistics showed that wages, excluding bonuses, climbed 0.6% sequentially in the second quarter, slower than a 0.8% growth in the first quarter. Wages rose 0.6% each in the public and private sectors.
Compared to the previous year, wages climbed 3.8% in the second quarter, slower than 4.2% increase in the first quarter.
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