Wednesday June 10, 04:55 AM
Australian consumer confidence soars: survey
SYDNEY (AFP) - Australian consumer confidence staged its biggest monthly jump in 22 years in June after the economy defied predictions it was headed for recession, a survey has shown.
The Westpac-Melbourne Institute consumer sentiment index surged 11.3 points or 12.7 percent to 100.1 in June, wiping out a number of steep falls recorded earlier this year.
Any reading on the index above 100 points means that there were more optimists than pessimists among the respondents. The latest reading is the highest since January 2008.
"This is a truly remarkable result," Westpac chief economist Bill Evans said.
"It is the second largest recorded increase in the index since the survey began in 1974 and the largest increase in the last 22 years."
Evans (EVAN.PK - news) said consumers had been encouraged by data released last week showing that the economy grew 0.4 percent in the first three months of the year, reversing a 0.6 percent contraction in the final quarter of 2008.
That meant Australia avoided a technical recession, usually defined as two successive quarters of negative growth, and gave Australia the highest growth rate of any developed nation.
Evans said that the psychological boost of avoiding a recession had been reflected in the nationwide survey of 1,200 randomly-selected people.
"On the assumption that Australia had avoided a recession and the worst had passed, consumers have become much more confident," he said.
However, he said such confidence may be premature, pointing out that the March quarter growth surge only occurred because of a sharp fall in imports which was unlikely to be repeated through the rest of the year.
Evans said this meant more negative quarters were likely this year, rekindling recession fears.
"This points to a potential negative shock to sentiment when the June quarter (growth) figures are released in September," he said.
The bullish consumer sentiment figures follow separate data released Tuesday showing business confidence rose 12 points to minus two last month, its best reading in more than a year.
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