SYDNEY, July 11 (Reuters) - A measure of Australian consumer confidence jumped in July as households became more optimistic about the economic outlook and their finances following recent interest rate cuts, a survey showed on Wednesday.
The poll of 1,200 people by Westpac Bank and the Melbourne Institute showed its index of consumer sentiment climbed 3.7 percent in July to 99.1, adding to June’s slight 0.3 percent increase.
“Finally we have some evidence that the Reserve Bank’s policy of cutting the official cash rate by 125bps between November last year and June this year is starting to gain more positive traction with households,” said Westpac chief economist Bill Evans.
“Over the month, households were probably buoyed considerably by the result from the Greek elections and the positive reception to the latest European leaders’ summit, averting, at least for the time being, a new crisis in Europe.”
Falls in petrol prices, down by 13 percent since May and gains in the share market as well as a rally in the Australian dollar to $1.0200 from $0.9800 also added to confidence.
“However, this result is far from convincing and should not be interpreted that we can expect confidence to steadily return to more normal levels over the months ahead,” Evans warned.
“It is our view that interest rates in Australia are still too high.”
The Reserve Bank of Australia (RBA) left interest rates steady at 3.5 percent this month, saying a material easing had already been delivered and pointing to resilience in indicators of domestic activity.
The survey’s measure of consumers’ outlook for economic conditions over the next 12 months rose 5.8 percent, while that for the next five years climbed 5.2 percent.
The survey’s measure of family finances over the next 12 months gained 3.0 percent in July. The index for family finances compared to a year ago rose 4.6 percent.
Consumers also seemed in a mood to spend with the measure of whether it was a good time to buy a major household item rising 1.1 percent in July. (Reporting by Ian Chua; Editing by Lincoln Feast)