The Westpac–Melbourne Institute Index of Consumer Sentiment rose by an impressive 6.4% in May from 96.2 to 102.4. This jump in sentiment marks the first time since February that the Index has been above 100 - the point which optimists outnumber pessimists.
Westpac's chief economist Bill Evans said the boost in confidence could be largely attributed to the recent rate cut combined with the Federal Government's relatively benign Budget. In recent times the Index has, typically, fallen in May (down in six of the last 10 years) with the Budget usually the key explanation. This month's lift marks the first time that consumer sentiment has improved in May since 2007.
Looking deeper into the data we can see that confidence in housing also recovered in May - jumping 5.0%.
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