Buyers more hopeful: survey

The combination of tax cuts, interest rate cuts and lower petrol prices appears to have brought on a surge in consumer confidence in the past month - for a certain type of consumer.

Men are feeling very good - perhaps because they got more of the tax cuts than women.

For the first time in a year, more of them feel good about the economy, albeit by a small margin. Optimistic men outnumber pessimistic men by 0.08%.

In contrast, the latest Westpac-Melbourne Institute survey suggests that women feel overwhelmingly negative, with pessimistic women outweighing optimistic women by 15.7%.

Both genders report feeling better after the interest rate cut - but men by 9.7% and women by 4.6%.

There's a similar divide when it comes to home ownership. Australians who have already paid off their houses weren't much moved by this month's interest rate cut, feeling just 2.4% more confident. But those still tied to a mortgage jumped in confidence by 10.8%

Westpac chief economist Bill Evans described the result as "remarkable". Consumer confidence soared 7% in September after jumping 9.1% in August - a compound jump of 16.7%, one of the biggest this decade.

The London-based strategist at TD Securities, Stephen Koukoulas, said the resilience fitted in with other data that suggested the Australian economy would not be heading into a recession as he had feared.

But it suggested that the Reserve Bank's program of interest rate cuts would be more muted, "certainly less than the market currently has priced in".

"With consumer sentiment on the rise and with it, consumer spending likely to increase, demand may well underpin price pressures," Mr Koukoulas said.

"Inflation may well stay sticky. As a result, interest rate cuts will be small and infrequent."

Treasurer Wayne Swan said that, while he welcomed the boost in confidence, Australians should not get "too excited".

"It is only one figure, but it does highlight the benefit to family budgets of the tax cuts we delivered and of course this month's interest rate cut," Mr Swan said.

Middle-income earners appear to have been the most cheered by the tax and interest rate cuts, with their confidence level up 22.5% in September. In contrast, Australians earning more than $60,000 were only 4% more confident and Australians earning less than $40,000 were 7% more confident.

Most of the change in sentiment relates to feelings about the future. When asked whether now was the right time to buy a major household appliance, only 33% of those surveyed said yes. Forty-five per cent said no.

Other figures released yesterday show that new borrowing fell 1.3% in July, the sixth consecutive monthly fall.

But the confidence survey provides grounds for optimism about future borrowing. Forty-one per cent of Australians surveyed felt that now was the right time to buy a house, up from 32% in June.

MALCOLM MAIDEN

The building blocks of a recovery are falling into place, and share prices will rally and hold the gains when investors no longer believe there is potential for rogue events to derail the

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