SYDNEY (REUTERS) - A measure of Australian consumer confidence rose for a third straight month this month, as people grew more upbeat about the economic outlook and their own finances, suggesting lower interest rates were working to revive demand.
The poll of 1,200 people by the Melbourne Institute and Westpac Bank showed its index of consumer sentiment climbed 2 per cent this month, on top of last month's steep 7.7 per cent jump. It was also up a healthy 15.1 per cent on March last year. The index of 110.5 was the highest since December 2010 and meant optimists increasingly outnumbered pessimists in the poll.
"This is a strong result," said Westpac chief economist Bill Evans. "The clear signal from this survey is that the RBA's rate cuts are gaining some traction with households."
The Reserve Bank of Australia (RBA) cut interest rates by 125 basis points last year, taking them to a record-matching low of 3 per cent. It skipped a chance to move further at its March meeting in part because it felt the extent of past easing had yet to be fully felt.
"Equity markets and the associated signals that global economic prospects are improving are the other key driver of this improved confidence," added Mr Evans.
Details of the survey showed a further pick up in the economic outlook. The index of expectations for the economy in the next 12 months rose by 0.8 per cent, to be up almost 24 per cent for the year. The measure for the economy over the next five years increased by 6 per cent in March.
People were also feeling better about their own finances.
The index of family finances compared with a year ago rose 3.9 per cent, while that for finances over the next 12 months increased by 3.1 per cent. And they seemed more willing to spend. The index of whether it was a good time to buy a home was up almost 20 per cent on March last year, while that for new vehicles was 17 per cent higher.
The only dip came in the survey's measure of whether it was a good time to buy a major household item, which fell 1.6 per cent, but that was from an historically high level.
Mr Evans, however, said consumers were still worried about losing their jobs and until the employment picture brightened there was a still a chance the RBA would have to cut rates again.