Australia missed recession as indicated by rise in Consumer Sentiment
An increase of 12.7% in the Westpac-Melbourne Index of Consumer Sentiment was recorded this June. Form its 88.8 in May, it has become 100.1 in June.
The Chief Economist of Westpac, Bill Evans, stated that the increase was truly an astonishing event, making the record as the largest increase in the Index since its first survey began in 1974. It was also considered the largest increase in the last 22 years.
Evans further stated that the said amazing increase must have resulted from the quarter national accounts of March which was released last Wednesday. The records showed that a small but nonetheless positive growth rate for the Australian economy was registered in the March quarter which followed the reduction in the economy registered in the December quarter. The said result was greatly hailed by the media as it indicated that Australia has successfully avoided a recession which was indicated by the two consecutive quarters of negative growth.
This is welcomed news for the consumers since they had already taken advantage of the 385 bp cut in the variable mortgage rate. They have also benefited from the $14 bn of direct government transfer and will again from another $5 bn which is expected to come. There was also a considerable decrease in the unemployment rate in Australia which has recorded a 5.4% in April. With the assumption that the country has successfully eluded the recession with the worst already passed, consumers have become more positive.
Recession became known to the consumers when in March 2001, the Index took a dip of 13.2% after the release of the December quarter national accounts. This indicated a negative growth and was acknowledged in the media as a looming recession. However, the Index made a comeback with a 11.6% increase as illustrated by the March quarter data.
There are other factors that were considered as contributors to the significant result. Caused by the continuous positive move in the financial assets especially in the global share markets, indicated by the 26% increase since March and 5% since the lat survey, Consumer Sentiment has been progressing as compared to some of the major economies like the America which only recorded a 5.5% growth from its 22% in February.