What is the Westpac Consumer Confidence Index
The Westpac Consumer Confidence Index is an index measuring the level of consumer confidence in Australia. The Westpac consumer confidence index is published by the Westpac group and is used to measure household economic expectations by averaging five different indexes that measure separate aspects of consumer sentiment and fiscal health.
The index is also called the Westpac Melbourne Institute Consumer Sentiment Index.
BREAKING DOWN Westpac Consumer Confidence Index
The Westpac Consumer Confidence Index measures household views on current buying conditions in Australia, their views on eco-political policies such as taxation, their views on where they would invest at the present time and their views on economic news like inflation and employment numbers. The Westpac Group published numerous economic reports intended to measure Australia's economic climate, including retail sales figures, GDP figures and interest rate expectations.
Similar to the U.S. Consumer Confidence Index, the Westpac Consumer Confidence Index is a useful barometer measuring the degree of optimism on the state of the Australian economy, its primary gauge captures consumers sentiment as expressed through their levels of savings and spending. As a prime of reference, the Westpac Consumer Confidence Index's methodology is similar to the University of Michigan Consumer Sentiment Index, which is conducted by the University of Michigan's Institute for Social Research.
To measure changes in the level of consumer confidence in economic activity, Australia's Consumer Confidence Index uses five indices to reflect consumers’ evaluations of:
- Household financial situations over the past year and the coming year
- Anticipated economic conditions over the coming year and the next five years, and
- Buying conditions for major household items
Consumers are also surveyed for attitudes toward buying conditions for cars and dwellings, their preferred place for savings, and their economic news recall. Generally speaking, a high reading is seen as positive (or bullish) for the Australian dollar (AUD), whereas a low reading reflects negative (or bearish) outlook.
Australian policymakers and the Reserve Bank of Australia (RBA), Australian's central bank, can use the Confidence Index to help form monetary and fiscal policy. The private sector can also glean valuable economic sentiment useful in anticipating employment needs, product pricing, and investment planning.