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Westpac – Melbourne Institute Consumer Sentiment IndexJuly 2009

Table 1: Consumer Sentiment Index

Jul2007Jul2008Jun2009Jul2009% change onJun 2009% change onJul 2008

Seasonally Adjusted* 120.8 79.0 100.1 109.4 9.3 38.5Trend** 117.8 83.3 99.4 104.7 5.4 25.7

See footnote below for discussion on the seasonal adjustment process.

The Westpac – Melbourne Institute Consumer Sentiment Index increased by 9.3 per cent in July to109.4 from 100.1 in June. This is the second consecutive month that the index is above the 100 mark showing that optimists out-weigh pessimists compared to this time last year.Four of the five component indexes rose in July (see Table 2) with the two largest increments of 19.6 per cent and 15.7 per cent, respectively, recorded by the indexes reflecting economic conditions in thenext 12 months and in the next 5 years. However, the index reflecting family finances vs a year agodeclined slightly by 0.9 per cent. Overall, the expectations index increased by 12.0 per cent while thecurrent conditions index rose by 5.1 per cent.

Improvements in consumer sentiment were recorded in all groups disaggregated by demographiccharacteristics (see Table 3) except for those with an annual income below $20K. Notableimprovements of greater than 15 per cent were registered by respondents in the occupation group:labourer and operator, and in the household income group: $20K to $40K.This month’s survey was conducted in the week where “Fair Work Australia” replaced “Work Choices”. Interestingly, the sentiment of respondents who would vote for the ALP was above 100while the sentiment of respondents who would vote for the Coalition was below 100.

Chart 1: Consumer Sentiment Index

7595115135Jul-03 Jul-05 Jul-07 Jul-09

O p t i m i s t s - p e s s i m i s t s + 1 0 0

SA TrendIndex

Chart 2: Current Conditions Index minusExpectations Index***

-20-1001020Jul-03 Jul-05 Jul-07 Jul-09

Index

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* In June 2006 we moved to reporting seasonally unadjusted series after we conducted a series of tests on the data which indicated no statistical evidenceof seasonality. However, further research showed that the January monthly changes were, in general, significantly larger than the average monthly changesfor the rest of the year. Consequently, we have adopted a new methodology to filter the raw data for the regular large monthly movements in January. Thisnew filtered series is our new seasonally-adjusted (SA) CSI.**Trend for the latest month is based on 2-month moving average while the rest are based on 3-month centred moving average.***The difference between these two indices provides an indication of consumers’ perception of the state of the economy now and in the future. A positive (negative) value implies that consumers view current conditions more (less) favorably compared to the future.

Consumer sentiment rose inuly…with significant improvement in the indexrepresenting economicconditions inthe next 12months

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Table 2: Consumer Sentiment Index – component questions (SA)

Jul2007Jul2008Jun2009Jul2009% change onJun 2009% change onJul 2008

Family finances vs a year ago102.463.782.481.7-0.928.3Family finances next 12 months116.987.7113.8117.23.033.6Economic conditions next 12 months128.662.985.2101.819.662.0Economic conditions next 5 years110.592.6105.5122.015.731.8Good or bad time to buy major h’hold items145.588.2113.4124.19.540.8Current Conditions Index*123.975.997.9102.95.135.6Expectations Index**118.781.1101.5113.712.040.3 Percentage who reported that they were optimistic minus the percentage who reported that they were pessimistic plus 100.*Average of the two component indices that relate to current conditions.**Average of the three component indices that relate to expected conditions.

Table 3: Consumer Sentiment Index – by demographic characteristics (SA)

Jul2007Jul2008Jun2009Jul2009% change onJun 2009% change onJul 2008

Gender Male125.6 82.4 102.2 115.1 12.6 39.7Female116.2 75.9 98.0 104.0 6.2 37.2By age 18-24122.4 94.8 103.7 116.6 12.5 22.925-44124.2 77.3 102.0 112.2 9.9 45.1Over 45117.6 76.7 97.5 105.4 8.1 37.5By home ownership Tenant117.2 84.0 107.6 116.5 8.4 38.7Mortgagee123.6 76.1 101.1 109.6 8.4 44.1Wholly owned120.5 78.9 95.1 106.1 11.6 34.5By Fed. voting intention Coalition134.9 73.1 94.9 99.2 4.5 35.8ALP117.2 86.1 104.3 118.9 14.0 38.1By occupation Manager/prof.127.5 76.6 101.1 110.7 9.4 44.5Paraprof./trades123.2 77.2 97.0 110.5 14.0 43.1Sales/clerical125.0 82.8 109.0 110.4 1.3 33.3Lab./operator 123.5 74.1 97.2 113.1 16.4 52.6 Not working112.7 80.8 97.7 107.6 10.1 33.2By household income p.a. Up to $20K 97.0 76.1 106.1 100.1 -5.7 31.5$20 to $40K 118.7 78.3 96.0 111.0 15.7 41.7$40 to $60K 126.0 83.3 96.2 107.9 12.1 29.6Over $60K 129.7 78.5 101.9 111.0 8.9 41.4By area Metropolitan120.9 82.4 101.0 107.7 6.7 30.7 Non- Metro.120.0 74.4 98.7 111.7 13.2 50.2