Australian consumers now confident.The word from Australia, as that country heads into 2007, is that while consumer sentiment "surged" in December 2006, the results do not point to boom times. With the release of the latest consumer sentiment survey on December 13, 2006 showing an increase of almost 12 points analysts point to the Christmas season and favorable unemployment statistics as the major underlying factors. The survey-Westpac-Melbourne Institute Survey of Consumer Sentiment-is the product of a joint effort between Australia's Westpac Banking Corporation (Sydney) and the University of Melbourne
In 2006, Times Higher Education Supplement ranked the University of Melbourne 22nd in the world. Because of the drop in ranking, University of Melbourne is currently behind four Asian universities - Beijing University, . The 11.8 point increase was more than welcome because consumer sentiment in November 2006 declined 10 points. Recently, the Reserve Bank of Australia The Reserve Bank of Australia came into being on 14 January 1960 to operate as Australia's central bank and banknote issuing authority. The bank offers banking services to the Federal Government, and to licensed banks that participate in the payments system. (RBA RBA Rare Bird Alert RBA Reserve Bank of Australia RBA Run Book Automation RBA Rochester Business Alliance RBA Rights-Based Approach RBA Royal Brunei Airlines (ICAO code) RBA Relative Byte Address RBA relative binding affinity ) had been raising interest rates in an attempt to control inflation. The rate increases were thought to be the cause for the drop in consumer sentiment. The Global Head of Economics for Westpac was interviewed on Australian Broadcasting Corporation The Australian Broadcasting Corporation (ABC) is Australia's national public broadcaster, known previously as the Australian Broadcasting Commission. The ABC provides television, radio and online services throughout metropolitan and regional Australia, as well as (ABC ABC in full American Broadcasting Co. Major U.S. television network. It began when the expanding national radio network NBC split into the separate Red and Blue networks in 1928. ) television on December 13, 2006, and during the interview he termed the December 2006 increase in sentiment "stunningly large." He added, "I think that the overriding driving factor has been the strength of the labor market labor market A place where labor is exchanged for wages; an LM is defined by geography, education and technical expertise, occupation, licensure or certification requirements, and job experience , that consumers feel comfortable with their employment prospects." The economist went on in the interview to characterize the role of the recent RBA rate hikes by comparing consumer sentiment declines associated with previous rate hikes. What caught his attention was that when the RBA raised its rates causing a decline in sentiment, sentiment would subsequently rebound if there was no follow-up hike-but not to the extent of the original decline. In regard to the December 2006 confidence survey, he said the consumer sentiment increase more than made up for the decline that followed a rate hike. The often noted volatility of consumer sentiment indexes sentiment index A numerical guide to investor feeling toward the securities markets that is constructed to determine whether certain segments of the investment community are bullish or bearish. also came up in the interview. The ABC interviewer pointed out that a former RBA governor was fond of discounting consumer sentiment information particularly because of sentiment volatility. In spite of that caveat, however, optimism is better entree to 2007 than pessimism. MARKET FOCUS: |
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