Latest NewsConsumer Sentiment Jumps 5.2% in Sept.Friday, 16 September 2016

Consumer sentiment surged 5.2 per cent in September, a leading survey has shown, placing sentiment at its highest level in more than two years.

The Westpac-Melbourne Institute consumer sentiment index jumped to 119.3 in September, from 113.4 in the previous month – its highest level since July 2007.

Westpac chief economist Bill Evans said the result was "extraordinary", and considerably strengthened the case for a rate rise from the Reserve Bank of Australia as early as next month.

However, he said upcoming data was likely to give the RBA a better reading on economic momentum.

"Our current forecasts point to a slowdown in that momentum that would probably motivate the Bank to defer any decision for another month at least," Mr Evans said.

"However, evidence over the next few days that this momentum has not slowed would clear the way for an immediate rate hike."

Growth in consumer sentiment during September helped the index post a 34.4 per cent rise over the past four months.

"[This is] the largest four month increase in the 35 year history of the index," Mr Evans said.

"For consumers, the good news on the economy is 'drowning out' any warnings on rate rises."

Mr Evans said the bank's current outlook was for consumer spending to consolidate over the second half of 2009, before accelerating to three per cent growth in 2010.

"If these levels of confidence can be sustained, then the outlook for consumer spending growth will need to be substantially upgraded," he said.

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