Australian consumers remained cautious in June as the Westpac-Melbourne Institute Consumer Sentiment Index edged up 0.5% to 92.6.
The modest improvement was driven by recent policy support, including the Reserve Bank of Australia's interest rate cut in May and moderating inflationary pressures.
Matthew Hassan, Westpac’s Head of Australian Macro-Forecasting, said the outlook remained mixed.
"The overall mood remains broadly unchanged with consumers stuck in a holding pattern of ‘cautious pessimism’," he noted.
"The RBA’s rate cut and moderating inflation are providing significant boosts, particularly around buyer attitudes towards major purchases."
Notably, buying intentions showed a promising lift as the cost-of-living squeeze began to ease.
"Indeed, more consumers saw the interest rate news as favourable than unfavourable, the first outright positive read since 2021 and the strongest positive in nearly five years," Hassan added.
In a separate release, the NAB Monthly Business Survey for May showed a mixed picture. Business confidence rose by three points to +2 index points, with improvements seen in most sectors except manufacturing, mining, and wholesale.
NAB Chief Economist Dr Sally Auld noted persistent weakness in the retail sector.
“By industry, the persistent weakness in retail business conditions and confidence aligns with the softer than expected pick-up in consumption over Q1,” she said.
Business conditions eased by one point to 0 index points in May, primarily due to a three-point drop in employment. Profitability remained negative at -4 index points, and trading conditions eased slightly to +5.
“Our trend business conditions measure has fallen steadily since late 2024 despite the pick-up in activity over the past two quarters,” Dr Auld added. “Weak profitability is a key driver, which remains in negative territory.”
Finally, the Australian Bureau of Statistics' Monthly Business Turnover Indicator for April showed a 0.3% rise, with gains in seven of the 13 industries.
Turnover gains were led by accommodation and food services, as well as arts and recreation services, while administrative and support services, construction, and information media and telecommunications posted declines.
Year-on-year, 11 of the 13 industries recorded turnover growth. Manufacturing led the gains with a jump of 11.4%, followed by accommodation and food services and information media and telecommunications.
Mining and administrative services were the only industries to see annual declines, falling 3.1% and 0.8% respectively.
