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Australia Consumer Sentiment Recovers In June

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Australian consumer confidence rebounded in June after sharp deterioration in the past two months as their view of family finances improved markedly, a survey by Westpac and the Melbourne Institute revealed Wednesday.

Still, households remained downbeat about the prospects of the broader economy, the survey found.

The headline consumer confidence index rose 4.7 percent to 102.2 in June from 97.6 in May. Reading above 100 indicates optimists outnumbered pessimists.

The sub-index tracking assessments of family finances a year ago rose 8.5 percent, more than reversing the 8 percent drop in May. The indicator reflecting expectations for family finances over the next 12 months rose 5.3 percent.

The sub-index tracking views on "whether now is a good time to buy a major household item" posted a modest 3.7 percent gain in June. This is the only sub-index at high overall levels above historical averages.

Consumers see this as an opportune time to enter the housing market, likely reflecting the low cost of finance and comparatively good affordability, the report said. However, worries about the economic outlook are likely discouraging many buyers.

The Reserve Bank of Australia cut the benchmark cash rate to record low of 2.75 percent in May and has kept the door open for further easing if economic situation worsens.

The concerns surrounding the Federal Budget, that hurt consumer mood in May, abated somewhat in June. However, there was clear deterioration in sentiment regarding the outlook of the Australian economy.

These fears would have been underscored by the weak first quarter national accounts data, a sharp sell-off in the share market and a slide in the Australian dollar, Westpac Senior Economist Matthew Hassan said.

The news on employment was also viewed as highly unfavorable by households, the report noted.

by RTT Staff Writer

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