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"Business and household sentiment is improving".
The main determinant of household sentiment is the state of the job market.
"Rate cuts now potentially have a negative impact on household sentiment," he said.
Consumer prices rose the most in almost a decade in December, which, combined with falling wages, drove household sentiment to a four-year low.
The latest monthly health-check of household sentiment found a sharp drop in optimism in July followed by a rapid recovery in August.
IHS Markit, the financial data company, reports that household sentiment has fallen to 43.3, the lowest level since February last year, down from 43.4 last month.
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Separate reports Friday showed the nation's manufacturing sector expanded robustly in August behind strong gains in employment and inventory measures, while consumer confidence, as tracked by the University of Michigan, rose sharply last month as household sentiments were buoyed by increases in incomes and rising wealth from appreciating stocks and home values.
While responses vary across demographic groups (e.g., political affiliation and household income), overall sentiment regarding CEO pay remains highly negative.
"There has been an improvement in indicators of household and business sentiment recently, though it is too soon to judge how persistent this will be," Stevens said.
Glenn Stevens, governor of the Reserve Bank of Australia, struck a rather cautious tone about Australia's economy, saying: There has been an improvement in indicators of household and business sentiment recently, but it is still unclear how persistent this will be.
During a speech in New York yesterday, Roger W. Ferguson, the vice chairman of the Fed, said, "Despite the sharp weakening in sentiment, household spending appears thus far to have held up well," according to a transcript released by the Fed.
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