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SYDNEY - Consumer sentiment continued to improve in January, with robust employment growth and wages gains offsetting negativity of higher interest rates, a new survey shows.
The Westpac/Melbourne Institute index of consumer sentiment rose by 7.3 per cent this month to 114.0 points from 106.2, indicating more people had a positive outlook than negative.
Westpac senior economist Justin Smirk said the strength in the gain was surprising given the strong recovery in December.
January's improvement in sentiment is stronger than the 11.8 per cent recovery in sentiment in December, following a sharp fall of 9.7 per cent in November after the last interest rate rise.
Mr Smirk noted that all five components of the index rose.
"Clearly, robust employment growth, wage gains, rising asset prices, including house prices, have offset the negativity of higher interest rates," he said.
The Reserve Bank of Australia (RBA) lifted rates by 25 basis points on November 8, to 6.25 per cent.
"Retail sales did moderate in the second half of 2006 as the RBA was lifting rates," Mr Smirk said.
"However, the surprisingly solid rebound in sentiment over December and January does beg the question: Was this moderation only temporary?"
- AAP
