The prospect of tax cuts in the federal government’s budget helped lift consumer sentiment last week, a survey of households suggests.
The Westpac-Melbourne Institute consumer sentiment index rose 1.9 per cent to 100.7 in April, breaching the 100-point mark that separates optimism from pessimism and regaining some ground after dropping 4.8 per cent to 98.8 in March.
“The month-to-month gain in sentiment was driven by a solid rise in expectations for the economy and family finances with some offsetting drag from weaker assessments around current finances and ‘time to buy a major household item’,” Westpac economist Bill Evans said.
The survey of 1,200 households – conducted between April 1 to April 5 – picked up a positive response to tax relief measures in the federal budget announced on April 2, according to Mr Evans.
“Sentiment over the course of the week showed a clear boost, with sentiment amongst those surveyed post-budget 7.7 per cent higher than sentiment amongst those surveyed pre-budget,” he said.
About 15 per cent of respondents expected the budget to improve their finances over the next twelve months, 51 per cent expected no change and 22 per cent expected it to worsen their circumstances.
Mr Evans said it was unclear if the boost in optimism would be sustained given the fact that, with only the pre-budget responses considered, the index had been on track for a further deterioration in sentiment from March.
The overall results of the survey indicated those earning more than $80,000 a year recorded the largest boost in confidence in April.
Consumer confidence jumped 3.2 per cent in the month among survey respondents earning between $80,000 and $100,000 a year and increased 2.1 per cent for those with incomes of more than $100,000.
The poll recorded a dip in sentiment in April for people in the $20,000-40,000, $40,000-60,000 and $60,000-80,000 income brackets while those earning less than $20,000 had a 4.9 per cent gain but the sub-index only reached 89.9, indicating pessimists still outweighed optimists in that demographic section.
Over the last 12 months, confidence among sub-$20,000 earners dropped 10.1 per cent, $80,000-$100,000 earners had a 2.4 per cent boost and sentiment for those earning more than $100,000 fell 2.3 per cent.
The Westpac-Melbourne Institute poll also registered a 1.2 per cent gain in sentiment among renters in April, a 2.8 per cent dip for people paying off a mortgage and a six per cent jump for those who fully owned their homes.