Positivity is all around us with consumer sentiment rising by a buoyant 7.7 per cent in February.
The Westpac Melbourne Institute Index of Consumer Sentiment in rose to 108.3 from 100.6 in January.
Westpac chief economist Bill Evans said this is the strongest sentiment reading since December 2010 and is the biggest monthly gain since September 2011.
“It follows an extended period in which sentiment has disappointed, posting at best ‘neutral’ readings despite a substantial 175bp reduction in interest rates since October 201,” he said.
“The more positive February reading suggests lower interest rates may finally be starting to gain more traction with the consumer. That said, confidence is still well below the levels recorded during the last easing cycle in 2008-09 which saw sustained readings of around 120.”
“February’s lift in sentiment is despite fairly mixed influences in the month. The Reserve Bank left interest rates unchanged at its February meeting but signalled it was prepared to lower rates further if necessary. Housing markets continued to show signs of recovery although not a particularly vigorous one.
“Surprisingly weak retail sales and dwelling approvals data also suggest a weak finish to 2012. Official jobs data in the survey week showed the unemployment rate continuing to hold at 5.4 per cent in January but much of the detail of the report was again soft.”