Light at the end of the recession tunnel Down Under?

Consumer confidence appears to be on the rise in Australia according to the latest surveys. In fact, according the numbers the return of positive sentiment is the biggest bounce in confidence in 22 years.

Westpac and the Melbourne Institute conduct surveys to check consumer sentiment every month and the 12.7 per cent rise in June is the biggest increase in many years.

While the figures provide some indication of the positive effect of economic stimulus on consumer confidence, Australians have been warned not to get carried away by the month to month figures.

What is more important than the effect of economic stimulus, according to analysts is that Australia is not in a recession. According to Westpac the Australian consumer is now more confident.

Analysts point out that consumers now feel that they have been well rewarded with an almost 4 per cent cut in their mortgages- a $15 billion payout from the government which helped beat the recession. They say that everything seemed to have worked out quite well for the consumer.

The confidence levels not withstanding, the economy has been at a standstill in net terms since the middle of last year and the GDP in March was better than expected because of a pronounced slump in imports as business investment fell steeply.

Analysts say that though Australia is not in recession, happy days are not quite here, though more and more people believe they are coming.

They add that when they looked a bit more deeply into the Index, they split it up between current conditions and expectations and found that consumer sentiment was only up by 2 per cent and expectations exceeded 20 per cent which indicated that consumers are feeling that the recession had passed though they are not saying that now. They are feeling better that it has passed.

Meanwhile, according to the Retailers Association the stimulus packages have had an effect and that around $4 billion out of the $21 billion what was circulated had gone into discretionary spend.

Analysts at the association say that the concern for the retail sector was that even if people had the money it would not be spent if they were not feeling confident about their jobs.

Meanwhile Australian shares soared to their highest level this year, as consumers start gaining confidence in the share market as a place to park their cash.

Only three months after confidence in shares dipped to record low during the financial crisis, the latest figures reveal that the share market is winning back investors.
According to the survey 12.3 per cent of Australians believe shares would be the best place to invest their savings.

This was up from 6.7 per cent in March, which was the lowest level recorded in the 34 years of the survey. The latest survey also points to confidence levels above those of a year ago when 11.3 per cent Australians felt comfortable investing in shares.