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The Westpac-MI Consumer Sentiment Index is an economic indicator. It shows how confident Australian consumers feel about the economy and their personal finances. Westpac and the Melbourne Institute publish it every month.
- In terms it helps us understand how Australian consumers are feeling about the economy.
- This is important because consumer spending is a driver of economic growth.
The index is based on a survey of households. It asks people about their views on finances, economic conditions and whether it is a good time to make major purchases.
The index is centered around 100.
- If it is above 100 it means optimists outnumber pessimists. This signals consumer confidence.
- If it is below 100 it means pessimists dominate. This signals confidence.
Why is it important?
Stronger consumer sentiment can support spending, growth expectations and equities. It can even support the dollar.
On the hand weak sentiment can point to softer consumption, slower growth and possible concerns for markets.
For example:
If the index jumps above 100 after weak months traders may think Australian consumers are becoming more willing to spend. This could support growth- assets.
