The Westpac-Melbourne Institute consumer sentiment index jumped 3.6 per cent in October to its highest level in a year and for the first time since November 2016 showed optimists outnumber pessimists.
Releasing the survey on Wednesday, Westpac chief economist Bill Evans said this welcome boost is consistent with an improving global economy, less concern over a rise in interest rates because of heated house prices and strong employment gains.
Data last week showed retail spending in August dropped for a second month a row, posting the worst performance in seven years.
Commonwealth Securities chief economist Craig James said in the space of two months consumer confidence has gained over six per cent.
“Consumers are getting their mojo back,” he said.
However, the International Monetary Fund’s latest World Economic Outlook brought both good and bad news on the economic outlook.
While it has upgraded its global growth forecasts again, bad weather events have meant Australia has failed to live up to its earlier expectations.
IMF economic counsellor Maurice Obstfeld says the global recovery is continuing and “at a faster pace”.
“We see an accelerating cyclical upswing boosting Europe, China, Japan and the United States, as well as emerging Asia,” he said.
The Washington-based institution now expects the world economy to grow by 3.6 per cent this year and 3.7 per cent in 2018, both 0.1 percentage points higher than previously predicted in July.
That compares with 3.2 per cent growth in 2016.
By contrast, the IMF expects economic growth in Australia to slow to 2.2 per cent in 2017 compared to 2.5 per cent in 2016 – a downgrade from its previous prediction of 3.1 per cent.
“Growth is expected to soften temporarily to 2.2 per cent in Australia, where housing investment and mining exports in the first half of the year were undermined by bad weather,” the report says.
National Australia Bank senior economist David de Garis thought that forecast was a “little low” and is below his bank’s 2.5 per cent prediction.
It also falls to the lower end of the Reserve Bank’s two to three per cent forecast range for this year.
The IMF expects the economy to grow by 2.9 per cent in 2018.
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