Australia's consumer confidence edges higher in Sept as personal finances improve

Consumer confidence in Australia edged higher for the second straight month in September, following improvement in personal finances, as consumer look forward to lower interest rates amid increased financial and political stability in the aftermath of the federal election.

The Westpac-Melbourne Institute survey of consumer sentiment climbed 0.3 percent in September, following a 2 percent increase the prior month, data released showed Wednesday. Also, data released by ANZ-Roy Morgan on Tuesday showed that the country’s consumer sentiment bounced back a solid 3.3 percent to 118.1 this week.

A phase of deflation poses a serious threat to the Australian economy and in lieu of this, the Reserve Bank of Australia had lowered its key interest rates to a new record low of 1.50 percent in August, a measure of precaution against depressing prices in the economy.

The bounce in confidence was largely driven by households’ views of the economic outlook. Households’ views of the 12-month economic outlook jumped 8.1 percent, while views of the five-year economic outlook rose a solid 4.6 percent. These series have been quite volatile over the past few weeks, but overall they both remain on an upward trend.

However, Westpac noted in its August sentiment report that consumers were less receptive to the RBA’s latest rate cut than they were to the one executed in May. The country’s gross domestic product grew at a much slower 0.5 percent pace in the second quarter, but continued to showcase stability as final consumption expenditure contributed positively to overall growth.

Meanwhile, AUD/USD is hovering just off session highs of 0.7489, but holding to a 30 pip range in the session and S&P/ASX 200 Futures rose 0.83 percent to 5,210.5 at 5:45 GMT.