The Westpac Melbourne Institute Index of Consumer Sentiment rose 2.9 per cent in January to 111.1 from 108 in December.
Westpac senior economist John Peters said this signalled continuing robust consumer spending in early 2000.
“The continued high level of the Consumer Sentiment Index provides support for Westpac’s view that consumer spending will continue to be a key driver of above trend economic growth into 2000,” Mr Peters said.
He said the rise in sentiment indicated the current broad-based strength in the economy – reflected in the lowest unemployment rate for a decade – was currently offsetting any concerns consumers may have about rising interest rates.
In response to the buoyant economy, Westpac has revised up its interest rate outlook, with the forecast peak in the interest rate cycle to now be 6.5 per cent rather than the original 5.75 per cent.