SYDNEY Oct 10 A measure of Australian consumer
confidence rose for a second month in October as a cut in
interest rates left households feeling more secure in their
finances and about buying a new home, though many remained
cautious on the longer-term economic outlook.
The poll of 1,200 people by the Melbourne Institute and
Westpac Bank showed its index of consumer sentiment
rose 1.0 percent in October to 99.2, after a 1.6 percent
increase the previous month. The index was up 2 percent on
October last year and shows optimists now almost equal
The survey was conducted in a week when the Reserve Bank of
Australia (RBA) cut interest rates a quarter point to a
three-year low of 3.25 percent, and left the door open to
The prospect of lower mortgage costs showed in the index of
family finances compared to a year ago which jumped 5.3 percent
in October. Respondents were also more optimistic about the
outlook for their finances over the next 12 months.
In a promising sign for retailers, the survey's measure of
whether it was a good time to buy a major household item climbed
3.7 percent. The index of whether it was a good time to buy a
home also surged 9.6 percent to be up 17.9 percent in two months
and the highest since September 2009.
"The most encouraging result from today's survey came from
the index tracking views on dwellings," said Westpac chief
economist Bill Evans.
"This message is consistent with other recent evidence of
firming auction clearance rates. The response of the housing
market to the recent rate cuts will be very important to watch."
The RBA has singled out the depressed home-building sector
as one area that it would like to see strengthen.
Still, the survey showed people continued to fret about the
future with measures of expectations well below those covering
The index of expectations for the economy in the next 12
months dipped 2.4 percent while that for the next five years
fell 4.6 percent.
Evans characterised this as a disappointing result which
argued for further cuts in interest rates.
"The Reserve Bank Board next meets on November 6. We expect
that the Board will decide to cut the overnight cash rate by a
further 25 basis points," he said.
Evans expects rates to bottom at a record low of 2.75
percent early in the new year.
(Reporting by Wayne Cole; Editing by Eric Meijer)