Consumer confidence rises on rate cut more than budget: Westpac
Consumer confidence jumped in the week after the budget, but Westpac said the result was more likely to have been driven by the rate cut on budget day.
The widely-watched Westpac - Melbourne Institute Index of Consumer Sentiment surged 8.5 per cent in May from April's result.
At 103.2, optimists outweigh pessimists, and the index result is the strongest since January 2014.
With the survey taken just after budget day, normally that would be expected to be the major influence.
However, Westpac's chief economist Bill Evans said the bank's analysis indicated that the dominant driver of the increase was the rate cut, also on budget day.
"Sharp increases in the index in response to rate cuts are fairly common, although they depend somewhat on other events at the time and whether moves were expected," he wrote in the report.
"The last four rate cuts have seen the index rise on average 6.6 per cent, with gains ranging from 3.5 per cent to 8.5 per cent.
"Supporting this view has been a stunning 15 per cent increase in the confidence of those respondents in the survey who currently have a mortgage."
Consumers rate budget as second best for them since 2010
This view was backed up by a special question on responses to the budget.
At -22.4 per cent this index showed more people thought the budget would have a negative rather than positive effect on their family finances over the next year.
However, this is actually the second most positive response since Westpac started asking this question in 2010, with every budget rated as making people worse off overall.
It is a similar response to that received by Joe Hockey's last budget in 2015, and a vast improvement on the Coalition Government's disaster first budget that scored -56.1 per cent.
"But this result is hardly the sort of glowing response that would explain an 8.5 per cent jump in the sentiment index," Mr Evans added.
The report noted that other aspects of the survey were positive, with the assessment of family finances versus a year ago up 3.2 per cent and the outlook for family finances over the next year up 7.2 per cent.
Consumer assessments of the economic outlook improved even more dramatically, 13.2 per cent for the one-year outlook and nearly 15 per cent for the five-year.
However, Mr Evans said views on the housing market were a little more mixed.
"Consumers' assessments of housing conditions improved, although there was a fall in confidence around the outlook for house prices," he noted.
"The 'time to buy a dwelling' lifted by 12.1 per cent, although it is still 6.4 per cent below its level a year ago. The strongest gains were in the most volatile state – New South Wales."
Source: ABC News