Australian consumer sentiment surged in June on the back of news the economy is holding up better than expected, while housing finance commitments rose for a seventh consecutive month in April, buoyed by historically low interest rates and government support for new home buyers.
The run of positive data adds to expectations that the Reserve Bank of Australia will hold steady for now its cash rate target at 3.0% as the Australian economy continues to outperform its industrialised peers. But some analysts said that an uncertain labour market outlook remains a key caveat to any optimistic assessments of the Australian economy.
The Westpac-Melbourne Institute index of consumer sentiment soared 12.7% in June from May, its largest monthly rise in the past 22 years. The index jumped to 100.1 points in June in seasonally adjusted terms from 88.8 points in May. The index is now the highest it has been since January 2008 and suggests the number of optimists in the consumer sentiment survey equals the number of pessimists. The consumer sentiment index rose 18.1% in June from a year earlier.
Housing data issued by the Bureau of Statistics show the housing sector continued to grow in April. The number of housing-finance approvals rose a seasonally adjusted 0.9% in April from March, the seventh consecutive month of rises and stronger than the 0.5% increase expected by economists. An 8.9% rise in investment housing loans in April suggests the health in the housing sector is broad-based and not just driven by the government's increased first home buyers grants, which do not apply to investment properties.