Consumer sentiment in Australia is at its highest level in more than two years, after surging 5.2 per cent in September as fears of a domestic recession subsided.
The Westpac-Melbourne Institute consumer sentiment index rose from 113.4 points in August to 119.3 points in September, the highest level since July 2007.
The index has risen 34.4 per cent in the last four months - the biggest four-month increase in its 35-year history.
Westpac chief economist Bill Evans said the result was “truly extraordinary” and put it down to consumers becoming more confident that Australia would avoid a recession.
“The standout story is the ‘relief rally’ for consumers - relief that the economy has avoided recession and that expected job losses have not materialised,” he said.
The survey of 1200 people was conducted last week, when the Australian Bureau of Statistics released data showing the economy grew in the second quarter of 2009.
The economy expanded by 0.6 per cent in the three months to the end of June, after growing by 0.4 per cent in the March quarter.
The latest ABS survey found that 70 per cent of respondents believed that current economic conditions were favourable, up from 35 per cent in June.
Mr Evans said the recent good news about the economy was “drowning out” warnings of impending interest rate rises.
Just 32.6 per cent of respondents could recall news of impending rate hikes, compared to 69.2 per cent who could recall stories about better economic conditions.
On September 1, the Reserve Bank of Australia opted to leave the cash interest rate at its current 49-year low of 3 per cent.
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