Australia consumer sentiment hits 10-year high

[SYDNEY] 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.

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

The index is now 48 per cent 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-19 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 per cent 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 per cent to be up 5.9 per cent on this time last year.

However, the "time to buy a dwelling" index moved off last month's seven year high, declining 5.9 per cent 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.

REUTERS