Consumer confidence bounced in June, but it may be short-lived as concerns about the economic outlook deepen.
The Westpac/Melbourne Institute index of consumer sentiment in June rose 4.7 per cent to 102.2 points.
It was above the 100 mark for the first time in two months, indicating that most of the people surveyed were optimistic about the economy.
Westpac senior economist Matthew Hassan said the index, released on Wednesday, recovered lost ground after posting sharp falls in April and May.
He said this was helped by easing concerns about the federal budget.
“All components of the consumer sentiment index recorded some improvement between May and June,” he said.
“The strongest gains were around family finance.”
CommSec chief economist Craig James said the Reserve Bank of Australia keeping the cash rate unchanged at 2.75 per cent after the June 4 board meeting would have been a factor in the rise in consumer confidence.
“Cutting interest rates from six per cent down to five per cent provides a significant benefit across the economy, however, when rates are cut from already super low levels to 53-year lows, it does send the message that there may be something wrong with the health of the domestic landscape.
“It is clear that the ongoing global economic concerns, weakness across an array of sectors and a sluggish labour market are seeing households remain hesitant about the economic landscape.”
Mr James said there are signs that Australian consumers are still being conservative about their money.
“In fact the latest readings on what consumers would do with any additional savings suggest that conservatism is still the big driver,” he said.
“Around a third of Aussies believe the wisest place for new savings is in the bank.
“It is clear that the ongoing global economic concerns, weakness across an array of sectors and a sluggish labour market are seeing households remain hesitant about the economic landscape.”
Mr Hassan also believes there was still concern about the Australian economy’s future.
“The economy is clearly the dominant concern for consumers in mid-2013,” he said.
“A key associated concern is how this may affect job security.
“News on employment had a lower level of recall but was viewed as deeply unfavourable by consumers in June.”
Mr Hassan said these concerns were underscored by a heavy fall on the Australian share market in May, and the seven per cent fall in the Australian dollar in the same month.
The Westpac/Melbourne Institute survey was conducted between June 3 and June 9.
