Australian Consumer Sentiment Rebounds in May Amid China-U.S. Tariff Truce

Australian consumer confidence showed signs of recovery in May as tensions eased in the U.S.-China trade war. According to the Westpac-Melbourne Institute, the consumer sentiment index rose by 2.2% to 92.1, partially rebounding from April’s 6.0% drop triggered by U.S. President Donald Trump's initial tariff announcements. Despite the improvement, sentiment remains in negative territory, with more pessimists than optimists overall.

The rebound comes as the latest ceasefire in the China-U.S. trade dispute helped ease global economic uncertainty. The index now stands 12% higher than it was a year ago, suggesting a more positive outlook among Australian consumers compared to mid-2024.

Matthew Hassan, Westpac’s head of macro forecasting, attributed part of the uplift to the decisive victory of the Labor Party in the national election held on May 3. Confidence among Labor voters surged 4.5% to 109.6, while sentiment among Liberal National supporters dipped 0.7% to 85.5, highlighting a political divide in economic optimism.

Respondents expressed increased confidence in personal financial conditions, with that sub-index rising 7.8%. The short-term economic outlook also improved, climbing 2.8%. In addition, the measure for whether it’s a good time to buy major household items rose 3.5%, now nearly 22% higher than the same period last year.

The latest survey suggests that while consumer confidence in Australia is still fragile, easing trade tensions and domestic political clarity are helping stabilize sentiment. This shift may support increased household spending and economic resilience in the months ahead.