The Westpac Melbourne Institute Index of Consumer Sentiment has found that the country’s consumer confidence has increased by 0.3 per cent from 95.3 to 95.6 in June.

 

"This is another disappointing result. It follows a second consecutive cut in the official cash rate by the Reserve Bank. Sentiment has risen only 1.1% from its April level and remains 1.7% below the level recorded in October last year despite a 125bp reduction in the cash rate that has brought the average standard variable mortgage rate down by nearly 1%,” Westpac’s Chief Economist Bill Evans said.

 

“Clearly other factors are dominating rates in the minds of consumers – those factors are concerns about the domestic economy and international conditions. “

 

The survey operated across five sub-indexes of consumer sentiment, with two improving and three deteriorating. Lower interest rates resulted in a solid upswing on the ‘family finances vs a year ago’ (up 4.6 per cent), and ‘time to buy a major household item’ (up 7.5 per cent).

 

However, the survey reported a significant deterioration in the sub index ‘forward views on family finances’ (down 7.7 per cent) and sub-index ‘views on economic outlook over the next five years’ (down 3.8 per cent).

 

“Responses to questions on ‘time to buy a dwelling’ and ‘time to buy a car’ both showed an improvement in June, with these indexes rising 8.2% and 7.5% respectively. Lower interest rates and lower prices are clearly improving affordability and buyer sentiment on both fronts although buyers will tend to be reluctant to follow through on purchases while there are concerns about the economic outlook and job security,” Mr Evans said.