Consumers did not express any disappointment after rates were left on hold this month
The fieldwork for the survey might have captured only a limited number of respondents polled in the wake of the first of the "out-of-cycle" mortgage rate rises as the survey closed the day of the first mortgage rate rises. But it certainly traversed the huge coverage given to the Reserve Bank of Australia (RBA) "no change" and speculation of whether banks would lift mortgage rates in the press and electronic media and the political sphere.
Instead, consumer sentiment rose a sizeable 4.2% after a more temperate 2.4% rise last month when a February cash rate cut was then still within market expectations. The current level of the index is at 101.0, up from 97.1, improving a touch from just below to just above average.
Even with the full impact of the out-of-cycle mortgage rate rises still to come, at least consumers have taken some comfort from a combination of what the RBA has done to date at the end of last year and conceivably no clear underlying deterioration in the economy or maybe even a modicum of improvement. In that respect, the NAB Business Survey for January contained not only a slight improvement in business conditions, but a surprising lift in retail industry confidence and that industry's forward orders.
You'd have to draw the conclusion that consumers do not feel as if they are haemorrhaging right now, despite some anecdotal reports to the contrary. You may or may not trust this survey - this writer has some respect for this survey - and you might think that if the same respondents were polled postafter the mortgage rate rises then there'd be a different response, but at the end of the day this survey does not add to the case for a March move from the RBA. At the margin, to the contrary.
To some extent, consumers would be taking some comfort from the fact that the RBA did ease monetary policy materially at the end of last year and is prepared to do more, if needed. Right now, that need is not pressing for the RBA and consumers could take some comfort from that.
Clinically, the survey is consistent with reasonable growth in both retail trade and broader consumer spending over time. This result is clearly better than might have been feared.