(Bloomberg) — Australian consumer confidence advanced this month in response to the Reserve Bank’s decision to extend a pause in interest-rate increases, though pessimism persisted over the broader economic outlook.
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The Consumer Sentiment Index rose 6% to 88.9 points, Westpac Banking Corp. said in a statement on Tuesday. Pessimists continued to outweigh optimists with 100 the dividing line between the two.
“This is still a weak result,” said Luci Ellis, Westpac’s chief economist. “The gain was concentrated among people with mortgages,” she said, pointing out that “all the monthly improvement” emerged after last week’s policy announcement. The survey was conducted Aug. 10-14, with the RBA decision released on Aug. 11.
Australia’s central bank kept its key rate unchanged at 4.35% for a second straight meeting after hiking three times earlier this year. Governor Michele Bullock maintained a hawkish bias, warning policymakers were prepared to tighten further if needed to combat inflation.
Westpac’s survey showed 59% of respondents still expect further increases in borrowing costs, little changed after last week’s meeting.
The RBA has noted that weaker consumer sentiment hasn’t yet flowed through to household spending, though it expects consumption will slow in the period ahead. Bullock told reporters at her post-meeting press conference that “people are still out there, but they’re looking for bargains.”
Sentiment hasn’t been helped by geopolitical upheaval, with the Middle East conflict an ongoing source of uncertainty that’s kept energy prices elevated. On Monday, President Donald Trump said he won’t seek to extend an expiring agreement with Iran, in the latest setback in efforts to end the war that has dragged on for almost six months.
Ellis said “that pervasive uncertainty, including about the Middle East, is still weighing on sentiment.”
Australia’s labor market has also held up reasonably well, with data expected to show unemployment in July remained at 4.4%, still low by historic standards.
Tuesday’s sentiment report also showed:
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The family finances vs a year ago sub-index increased 12.6% to 80 points. Ellis noted that while this is still a very weak read overall, it was the largest percentage improvement of any of the sub-indices in the month
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The economy, next 12 months sub-index lifted 5.8% to 82.8 points
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The time to buy a major household item climbed, up 8.1% to 93.8
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The Westpac–Melbourne Institute Unemployment Expectations rose to 135.7 from 129.9 in July — a higher reading means more respondents expect unemployment will increase over the year ahead
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The time to buy a dwelling index rose 12.1% to 95.7, the highest level since November 2025 but still below the long-run average of 119
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Sentiment about home purchase is being supported by expectations of future housing price moderation, Westpac said
