- Bill Evans, Westpac chief economist
Australia's consumer confidence improved this month following the Federal Government leadership change. The Westpac-Melbourne Institute's consumer sentiment index climbed 4.2% to 97.8 in October, compared with 93.9 a month earlier, when the gauge dropped 5.6%. A figure above the key 100-mark threshold indicates that the majority of consumers feel upbeat, while a reading below signals pessimism prevails in consumers' mood. The last time the index was above 100 was in May. The breakdown of the measure showed the sub-index of economic conditions for the next 12 months saw the greatest gains, surging 20%, more than reversing a precipitous decrease in September. The outlook for family finances for the next 12 months edged up 3.5%. The only drop came in the outlook for the Australian economy over the coming 5 years, which slid 7.9%.
However, the Reserve Bank of Australia gives an upbeat assessment of the Australian economy, saying that the probability of recession is very low. Yet, a period of contraction in the economy should not be ruled out. The weaker Australian Dollar has helped the economy withstand recent global shocks, such as plunge in commodity prices.
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