Global and domestic markets showed signs of resilience last week, as outlined in Westpac's latest economic insights.
The latest Westpac-MI Consumer Sentiment Survey delivered an encouraging update, with a remarkable 11.8% rebound over two months.
The headline index now sits at 94.6, its highest level in over two-and-a-half years, close to a neutral reading. Forward-looking measures showed strong improvements, with views on the economy for the year ahead up 23% and family finances rising 7.3%.
However, current measures, including “family finances versus a year ago,” remain historically weak.
“Consumers remain confident in the jobs outlook,” said Westpac’s Ryan Wells, Elliot Clarke, and Mantas Vanagas (pictured, left to right), citing robust labour market data despite slowing employment growth in October.
The NAB business survey for October showed business conditions holding steady at +7 points, with confidence improving by seven points to +5.
Businesses are cautiously optimistic as economic growth stabilises, supported by consumer tax cuts and the prospect of monetary policy easing.
Westpac forecasts GDP growth to rise from 1.5% by year-end to 2.4% by December 2025.
Financial markets reacted to the confirmation of a second Trump presidency, with the US dollar and Treasury yields climbing. Focus is now on tax policies, tariffs, and their effects on inflation.
The Westpac economists predict two rate hikes by the FOMC in 2026 as tariffs drive inflationary pressures, though disinflation trends are expected to persist until late 2025.
China’s October data highlighted the benefits of recent policy support, with retail sales accelerating to 4.8% annually.
Housing market declines slowed, and new measures were announced to refinance hidden debt and boost infrastructure spending.
However, outright stimulus remains absent, leaving markets cautious. Finance Minister Lan Fo'an’s promise of “more forceful” fiscal stimulus next year offers hope for a more robust recovery, the Westpac economists said.
Read the Westpac insights in full on the Westpac IQ website.
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