SYDNEY, Sept 11 (Reuters) - A measure of Australian consumer confidence jumped to a 33-month peak in September as lower interest rates and a change of government lifted optimism on the economic outlook, a survey showed on Wednesday.
The upbeat report will be a relief to the Reserve Bank of Australia (RBA) which has been counting on a revival in consumer and business spending to help plug the gap left by a cooling mining boom.
The survey of 1,200 people by the Melbourne Institute and Westpac Bank showed its index of consumer sentiment climbed 4.7 percent in September from August, when it had also risen by a solid 3.5 percent.
The survey was conducted from September 2 to 8. On Sept. 7, the conservative Liberal-National coalition won victory in elections, as expected, putting an end to three years of sometimes chaotic minority Labor government.
“I think it is reasonable to conclude that the election result played an important if not leading role in this strong boost to consumer sentiment,” said Westpac’s chief economist Bill Evans.
The index reading was the highest since December 2010 and left it up 12.7 percent on September last year at 110.6, meaning optimists now comfortably outnumber pessimists.
The effect on sentiment was clear as the confidence index for Coalition supporters surged over 19 percent in September, outweighing a 10 percent drop among Labor supporters.
The outcome echoed a survey of 600 businesses out on Tuesday that showed a sharp rise in confidence as firms counted on the election to put an end to political uncertainty for a while.
Also helping was the RBA’s decision to cut interest rates to record lows of 2.5 percent in August, which seemed to bolster sentiment on the economy.
The survey’s measure of economic conditions over the next 12 months rose 8.7 percent in September, while that for conditions over the next five years increased by 7.1 percent.
Respondents were more cautious about their own finances, rating them slightly worse than a year ago. A measure of family finances over the coming 12 months edged up a relatively modest 1.6 percent.
Still, consumers seemed in the mood to spend, with the index of whether it was a good time to buy a major household item jumping 6.9 percent in September.
That should be welcomed by retailers who have had a tough year as households chose to save more and borrow less.
There was also a shift in attitudes toward the best place to save, with fewer preferring bank deposits and more favouring real estate and shares, a shift toward risk-taking that policy makers have been hoping to see.
“There are a number of aspects to this survey that will give the RBA Board encouragement that the series of rate cuts, complemented by the confidence boost from the election, make policy settings about right,” said Evans.
“However conditions around the labour market, business investment, and actual consumer spending are still soft and the Board will require more time to assess the underlying strength of the economy.” (Reporting by Wayne Cole; Editing by John Mair)