Australia consumer sentiment hits 10-year high

SYDNEY (Reuters) -A measure of Australian consumer sentiment climbed for the fourth straight month in December to a 10-year high as the country further relaxed virus restrictions and states opened their borders to each other.

FILE PHOTO: A customer shops inside a Christmas store as coronavirus disease (COVID-19) regulations are further eased for the state of New South Wales in Sydney, Australia, November 26, 2020. REUTERS/Loren Elliott

The Westpac-Melbourne Institute index of consumer sentiment released on Wednesday climbed 4.1% in December from November, when it had risen 2.5%.

The index is now 48% above a nadir hit in April and has reached its highest level since October 2010 at 112, implying optimists far outnumber pessimists.

“After only eight months the evidence seems clear that sentiment has fully recovered from the COVID recession,” said Westpac Chief Economist Bill Evans.

Australia has successfully contained the novel coronavirus and massive fiscal and monetary stimulus since March has helped blunt the shock of the pandemic to the A$2 trillion economy.

Data out on Tuesday showed Australian business confidence and conditions had surged in November to “above average” levels, in a sign economic activity in the final quarter of 2020 will remain strong after a stellar September quarter.

Australia’s economy expanded by a faster-than-expected 3.3% last quarter led by solid household consumption, official data this month showed.

In a sign consumer spending will remain strong through Christmas the “time to buy a major household item” sub-index lifted 0.7% to be up 5.9% on this time last year.

However, the “time to buy a dwelling” index moved off last month’s seven year high, declining 5.9% to 124.2, suggesting a

turnaround in sentiment in Australia’s buoyant housing markets.

The index is usually a good gauge of buyer sentiment among owner-occupiers.

Reporting by Swati Pandey; Editing by Stephen Coates