Australia August consumer sentiment boosted by rate cuts

SYDNEY (Reuters) -A measure of Australian consumer sentiment improved sharply in August as the third cut in interest rates this year bolstered the outlook for finances and the economy, a survey showed on Tuesday.

A Westpac-Melbourne Institute survey showed its main index of consumer sentiment climbed 5.7% in July to 98.5, the highest reading since early 2022. The reading under 100 means pessimists still outnumber optimists, though only just.

The pick-up came after the Reserve Bank of Australia cut interest rates a quarter point to 3.60% and left the door open to further easing this year.

"That looks to have reinforced consumer expectations that mortgage interest rates are headed lower, giving a broad-based boost to sentiment," said Matthew Hassan, Westpac's head of Australian macro-forecasting.

The improvement was broad based across the survey's measures of confidence, with the index of the economic outlook for the next year jumping 7.6% while that for five years rose 5.4%.

Family finances compared to a year ago bounced 6.2%, and the outlook for the next 12 months picked up by 5.4%.

In a promising note for retailers, the index of whether it was a good time to buy a major household item gained 4.2%.

The survey's measure of whether it was a good time to buy a dwelling climbed 10.5% to a four-year high of 97.8, though that remains below the long-run average of 120 due to affordability constraints.

(Reporting by Wayne Cole; Editing by Tom Hogue and Shri Navaratnam)