SYDNEY, Oct 11 (Reuters) - A measure of Australian consumer sentiment jumped to its highest this year in October as an outbreak of optimism about the economic outlook and family finances overcame months of caution.
The survey of 1,200 people by the Melbourne Institute and Westpac Bank WBC.AX published on Wednesday found consumer sentiment climbed 3.6 percent in October, on top of a 2.5 percent rise the month before.
The index reading of 101.4 meant optimists outnumbered pessimists for the first time since November last year.
The pick-up will be a relief to policy makers after a shock slide in retail sales for August sparked concerns that consumers were going on strike.
"Consistent reports of an improving global economy may have been a factor behind this lift," said Westpac chief economist Bill Evans.
"Ongoing improvements in the labour market are also boosting confidence," he added, noting that sentiment among "trade" workers surged 22 percent in October amid strength in home and infrastructure construction.
While employment growth has accelerated markedly this year, it was not accompanied by a revival in wages, clouding the outlook for household incomes.
The better mood could be positive for the struggling retail sector, with the survey's index of whether it was a good time to buy a major household item rising 3.7 percent in October.
A survey of businesses out this week confirmed the retail sector was under heavy pressure, even as activity across other industries was the best in almost a decade.
The outlook on the economy improved markedly with the index for the next 12 months up 7.1 percent, and that for the next five years rising 1.4 percent.
Respondents were still guarded about finances, likely reflecting wall-to-wall media coverage of escalating energy prices.
The survey's measure of family finances compared to a year ago edged up 1.0 percent in the month, but was still down 6.1 percent on October last year.
Still, the measure of finances over the next 12 months fared better with an increase of 4.2 percent from September.
Analysts note that, historically, business surveys have a far closer correlation to activity in the broader economy than do polls of the consumer mood, which can prove fickle from month to month.