Indonesian consumers grew more upbeat in October, with Bank Indonesia's consumer confidence index rising to 119.9 from 118.1 in September, the central bank said on Monday. The gain reversed a dip the month before, but the survey also showed the poorest households polled still rating their present circumstances as pessimistic.

For investors, household demand is the main engine of Southeast Asia's largest economy, and the reading arrives after a rough stretch for Indonesian assets, with the rupiah under pressure. A firmer consumer gives some support to retailers, banks and consumer-goods companies listed in Jakarta. The split by income suggests the recovery in sentiment is narrow.

Bank Indonesia survey: both gauges higher

The index has two parts, and both improved. The current economic condition index rose to 109.1 from 107.5, while the consumer expectation index, which tracks views on the next six months, climbed to 130.7 from 128.7, according to Bank Indonesia's release. Readings above 100 indicate optimism. Kabar Bursa, a Jakarta market news site, reported the same headline figures, attributing the increase to stronger readings on both components.

The October gain lifts the expectations gauge to its highest level in the three monthly releases reviewed for this article. In September it had risen to 128.7 from 127.6 even as the headline index eased, Bank Indonesia said at the time, meaning households had been more hopeful about the months ahead than about their present situation.

That is a turnaround from September. The headline index then slipped to 118.1 from 118.5 in August, and the current-conditions gauge fell to 107.5 from 109.4 as respondents felt less positive about their incomes and the availability of jobs, The Jakarta Post reported at the time.

In October, the current income index stood at 114.9 and the job availability index at 105.5, according to Investortrust, which reported the survey's detailed tables. Ramdan Denny Prakoso, executive director of the central bank's communication department, said optimism was "bolstered by improved perceptions of current economic conditions," the outlet reported. The national index for buying durable goods, such as appliances and furniture, was steady at 106.7.

Lower-income households lag

The improvement was uneven. Households spending Rp1 million to Rp2 million a month had a headline score of 107.6, but their assessment of current conditions was 98.5 and their index for durable goods purchases was 95.2, both under the 100 line, Investortrust reported. In September, this group's view of current income had already slid to 99.9, according to The Jakarta Post.

Middle brackets scored higher: 117.9 for households spending Rp2.1 million to Rp3 million, 117.2 for Rp3.1 million to Rp4 million and 122.3 for Rp4.1 million to Rp5 million. The wealthiest group, spending more than Rp5 million a month, posted 123.0, down from 123.5 in September and the only bracket to fall. Investortrust's report framed the result as weakness at both ends of the income scale: a small slip among the richest respondents and sub-100 readings on key questions among the poorest.

For spending, a sub-100 durables reading among poorer households points to caution on bigger-ticket items even as the headline index improves.

Retail sales still sluggish

Better sentiment has not yet shown up as strong spending. Bank Indonesia's latest retail sales survey, published in October, estimated that its real sales index grew 1.4% year on year in September, barely faster than 1.3% in August. On a monthly basis the bank expected September sales to contract 2.3% after 0.8% growth in August. The index level for September was put at 221.3. Annual growth has stayed in a narrow band: July sales rose 1.1% from a year earlier, after a 3.0% decline in June, Investortrust reported in September.

The same survey pointed to rising price expectations. Its index of expected prices three months ahead rose to 149.9 from 146.5, and the six-month gauge climbed to 177.9 from 166.0. Higher expected prices can squeeze real incomes, particularly for poorer households, and keep the central bank wary about easing policy while it also defends the currency. Bank Indonesia has been intervening to steady the rupiah, and food prices pushed up October inflation.

For listed retailers and consumer lenders, the next test is whether the improvement in sentiment carries into hard data. Bank Indonesia's next retail sales survey will update its September estimate with actual figures and give a first read on October. Year-end holiday spending in December will show whether households in the lower brackets start buying again.