Consumer Sentiment Index October

8/8/2019 Consumer Sentiment Index October

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2010 The University of Melbourne, Melbourne Institute of Applied Economic and Social Research Page 1

Westpac Melbourne Institute Consumer Sentiment IndexOctober 2010Table 1: Consumer Sentiment Index

Oct2008

Oct2009

Sep2010

Oct2010

% change onSep 2010

% change onOct 2009

Seasonally Adjusted* 82.0 121.4 113.2 117.0 3.3 -3.6Trend** 86.6 119.7 116.5 115.1 -1.2 -3.8

See footnote below for discussion on the seasonal adjustment process.

The Westpac Melbourne Institute Consumer Sentiment Index rebounded by 3.3 per cent in October to 117.0 after a surprising drop of 5 per cent in September. Nevertheless, the current confidencelevel is still below the level at the beginning of the year.

Three of the five component indices rose in October. The largest increase of 9.9 per cent was recorded by the component index reflecting good or bad time to buy major households items. This wasfollowed by increases of 7.6 per cent and 1.4 per cent, respectively, for the component indices abouteconomic conditions next 12 months and next 5 years. On the other hand, the component indicesreflecting family finances vs a year ago and next 12 months, respectively, fell by 0.8 per cent and 3.8

per cent. Overall, the current conditions index rose by 5.5 per cent, and the expectations indexincreased by 1.9 per cent.

Increases in consumer sentiment were recorded in all groups disaggregated by demographiccharacteristics (see Table 3) except for the income group below $20K, and for the occupation group:Labourers and Operators.

This months survey was conducted in the week where consumers heard news about the RBA leavingthe official interest rate unchanged at 4.5 per cent for the fifth consecutive month, and about the

National unemployment rate remained at 5.1 per cent in September. In addition, there was significantamount of news about the high Australia dollars during the survey week.

Chart 1: Consumer Sentiment Index

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Chart 2: Current Conditions Index minusExpectations Index***

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Index

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* In June 2006 we moved to reporting seasonally unadjusted series after we conducted a series of tests on the data which indicated no statistical evidenceof seasonality. However, further research showed that the January monthly changes were, in general, significantly larger than the average monthly changesfor the rest of the year. Consequently, we have adopted a new methodology to filter the raw data for the regular large monthly movements in January. Thisnew filtered series is our new seasonally-adjusted (SA) CSI.**Trend for the latest month is based on 2-month moving average while the rest are based on 3-month centred moving average.***The difference between these two indices provides an indication of consumers perception of the state of the economy now and in the future. A

positive (negative) value implies that consumers view current conditions more (less) favorably compared to the future.

Consumer Sentiment up inOctober

withincrease inthree of thecomponent indices


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Table 2: Consumer Sentiment Index component questions (SA)Oct

2008Oct

2009Sep2010

Oct2010

% change onSep 2010

% change onOct 2009

Family finances vs a year ago77.0 93.4 94.4 93.7 -0.8 0.3

Family finances next 12 months 105.6 122.6 111.7 107.5 -3.8 -12.3Economic conditions next 12 months 68.8 131.4 118.0 127.0 7.6 -3.4Economic conditions next 5 years 87.6 127.9 108.4 110.0 1.4 -14.0Good or bad time to buy major hhold items 71.0 131.5 133.6 146.7 9.9 11.6

Current Conditions Index* 74.0 112.4 114.0 120.2 5.5 6.9Expectations Index** 87.4 127.3 112.7 114.8 1.9 -9.8

Percentage who reported that they were optimistic minus the percentage who reported that they were pessimistic plus 100.*Average of the two component indices that relate to current conditions.**Average of the three component indices that relate to expected conditions.

Table 3: Consumer Sentiment Index by demographic characteristics (SA)Oct

2008Oct

2009Sep2010

Oct2010

% change onSep 2010

% change onOct 2009

Gender Male 84.8 124.3 116.7 121.7 4.2 -2.1Female 79.4 118.5 110.0 112.5 2.3 -5.1

By age 18-24 110.9 122.1 124.4 132.5 6.6 8.625-44 83.5 125.9 116.9 121.4 3.8 -3.6Over 45 73.5 117.4 107.5 109.6 1.9 -6.7

By home ownership Tenant 88.4 119.8 115.0 118.8 3.3 -0.8Mortgagee 81.5 124.6 112.5 115.7 2.8 -7.1Wholly owned

79.8 118.4 112.9 117.4 4.0 -0.8By Fed. voting intention Coalition 81.0 117.9 101.6 108.3 6.6 -8.2ALP 85.8 129.5 125.6 126.5 0.7 -2.3

By occupation Manager/prof. 80.6 122.4 119.2 119.4 0.2 -2.4Paraprof./trades 87.6 127.0 118.7 125.0 5.3 -1.6Sales/clerical 91.5 131.3 116.8 121.7 4.2 -7.4Lab./operator 90.9 111.5 116.1 114.7 -1.2 2.9

Not working 78.3 117.0 104.0 111.1 6.8 -5.0By household income p.a. Up to $20K 72.9 108.4 104.9 103.5 -1.3 -4.5

$20 to $40K 84.6 121.9 96.2 112.8 17.2 -7.4$40 to $60K 82.8 119.6 111.6 115.8 3.8 -3.2

Over $60K 83.9 126.8 120.3 123.2 2.4 -2.8By area Metropolitan 82.5 123.4 114.2 118.7 4.0 -3.7

Non- Metro. 79.4 117.6 110.7 113.3 2.3 -3.7


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Chart 3: Changes in Consumer Sentiment andRetail Sales Growth*

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Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10-18

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12

17Retail sales growth (LHS)Quarterly change in consumer sentiment (RHS)

% change, 1quarter lead

% Seasonal adjusted, centred 3month moving average, 03/04 prices

Chart 4a: Family Finances Last 12 Months

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Trend SA

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Chart 4b: Family Finances Next 12 Months

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Chart 4c: Economic Conditions Next 12 Months

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Chart 4d: Economic Conditions Next 5 Years

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Chart 4e: Time to Buy Major Household Items

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*Source: Original Retail Sales deflated by the Consumer Price Index - ABS Catalogue No. 8501.0, Retail Trade: Australia and ABS Catalogue No. 6401.0, Consumer Price Index: Australia .


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Chart 5: Current Conditions Index

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IndexChart 6: Expectations Index

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Mortgage Home owner

Index Index

Chart 7a: Consumer Sentiment by HomeOwnership (SA)

Chart 7b: Consumer Sentiment by IncomeGroup (SA)

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Less than $20,000 $60,000+

Index Index

Chart 7c: Consumer Sentimentby Area (SA)

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MetroNon metropolitan

Index Index

Chart 7d: Consumer Sentiment by VotingIntention (SA)

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Coalition ALP

Index Index

Released: 13 October 2010 Coverage: persons 18 years and over, all states and the ACT.Interview period: 4 October 10 October 2010 Stratified by gender, age and location.Sample size: 1200


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Westpac Melbourne InstituteSurvey of Consumer Sentiment

The Westpac Melbourne Institute Survey of Consumer Sentiment index has been designed as a trend-less variable that provides an indication of the level of and shifts in consumer sentiment over time. The index is an average of five component indexes which in turn reflect the balance of favourable and unfavourable responses to five survey questions. These questions relate to family finances a year ago and in the next 12 months,economic conditions in the next 12 months and next 5 years, and good or bad time to buy major household items. An index level of 100 indicatesthat the balance of confidence or optimism is equally weighted, while an index of greater than 100 indicates that optimists outnumber pessimists.

The consumer sentiment index has been found to be a good predictor of economic activity.

Disclaimer: Westpac Banking Corporation, the University of Melbourne and the Melbourne Institute give no representation, make no warranty,nor take any responsibility as to the accuracy or completeness of any information contained herein and will not be liable in contract tort, for negligence or for any loss or damage arising from reliance on any such information. The WestpacMelbourne Institute Survey of Consumer Sentiment report presents the results of a survey of more than 1200 households, together with the professional analysis and views of theMelbourne Institute. These views and findings do not necessarily coincide with those of the Westpac Banking Corporation.

For information on the data contained in the report contact the Melbourne Institute, The University of Melbourne, on (03) 8344 2196.

2010 The University of Melbourne, Melbourne Institute of Applied Economic and Social ResearchThis report is copyright. Apart from any fair dealing for the purposes of study, research, criticism or review, as permitted under the Copyright Act ,no part may be reproduced without written permission.

ISSN 1836-4217 (Online)

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Consumer Sentiment Index October