Australia Consumer Sentiment Brightens in August as Rates Held
Synopsis
Australia’s consumer sentiment improved for a second month in August, with mortgage holders becoming less concerned about further interest rate increases.
Key Highlights
- Consumer sentiment was up 6.0% in August, to 88.9.
- Sentiment improved after the RBA held interest rates at 4.35%.
- The index for mortgage holders shot up by 16%, even as renters found their confidence slipped by 2.3%.
- The purchase of a home index jumped 12.1% to 95.7.
Australian consumer sentiment rose for a second month running in August as mortgage holders breathed a sigh of relief that further interest rate hikes might be off.
The Westpac-Melbourne Institute survey had the headline consumer sentiment index climbing up to 88.9 in August, a 6.0% increase on July’s number. Nonetheless, the index was nearly 10% lower than one year earlier, with pessimists still outnumbering optimists.
Rate Decision Boosts Confidence
Data, covering the period August 10 to 14, bounced following a decision by the Reserve Bank of Australia (RBA) to hold interest rates at between three and four point three five % on August (11), after earlier this year implementing not one but three rate hikes.
The responses after the meeting improved to 91.1 from 83.6 on reading what happened after the decision. The index for mortgage holders jumped 16%, and the index for renters dropped 2.3%.
Uncertainty Still Weighs on Outlook
Current financial and economic conditions increased modestly, however, the outlook decreased significantly.
Forward-looking views improved less than measures of current conditions, indicating that some uncertainty, including in the Middle East, remained on sentiment, according to Westpac chief economist Luci Ellis.
Buying Sentiment Rises
The index indicating whether it was a good time to buy a major household item rose by 8.1% to 93.8 but fell short of its long-run average of 123.0.
The index measuring whether it is a good time to purchase a dwelling rose 12.1% to 95.7 in October, its strongest result since November 2025 and still above the long-run average for this series at 119.
Source: Reuters
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