Australia consumer sentiment picks up in January

[SYDNEY] A measure of Australian consumer sentiment rebounded in January as sharp falls in petrol prices and better news on employment left people more ready to splash out on major items.

Wednesday's survey of 1,200 people by the Melbourne Institute and Westpac Bank showed its index of consumer sentiment rose a seasonally adjusted 2.4 percent in January, although that followed a 5.7 per cent drop in December.

The index reading of 93.2 was still down 9.7 per cent on the same month last year. Pessimists have now outnumbered optimists for 11 months in a row.

The survey was conducted in a week when official data showed the unemployment rate fell unexpectedly to 6.1 per cent in December as employment far outstripped forecasts.

Also helping the general mood has been the steady drop in petrol prices to six-year lows, which is adding to consumer spending power.

The impact showed in the survey, with the index on whether it was a good time to buy a major household item surging by 13.6 per cent to completely recover a sharp fall in December.

The index tracing assessments of whether it was the right time to buy a dwelling increased by 9.4 per cent, following a 10.8 per cent fall in December.

Other responses were much more mixed, however.

The survey's index for economic conditions over the next 12 months eased 0.7 per cent in January, while that for the next five years fell 1.6 per cent.

The measure of family finances compared to a year ago dropped 3.9 per cent, but the outlook for the next 12 months rose by 1.2 per cent.

Westpac chief economist Bill Evans argued the conditions were still in place for the Reserve Bank of Australia (RBA) to cut interest rates next month, although financial markets place scant chance on such a move.

REUTERS