Consumer confidence has bounced back to levels not seen since before the federal government's tough budget was released in May.
Confidence rose 3.4 per cent last week, according to the weekly ANZ-Roy Morgan consumer confidence report.
It is now back at levels seen at the start of May, before the budget was released on May 13, but remains six per cent lower than levels recorded a few weeks before that, when negative headlines around the budget began.
"Alongside the recent improvement in house prices, this is a positive sign that confidence is recovering from the initial `sticker shock' from the budget," ANZ senior economist Justin Fabo said.
"The recent improvement in consumer sentiment gives us more confidence that the non-mining recovery remains on track."
The pickup in confidence was driven by a sharp increase in household perceptions regarding economic conditions in a year's time and personal finances compared to a year ago, the report said.
ANZ economists expect consumer spending growth to remain moderate this year before improving next year as the non-mining recovery picks up.
"Where consumer confidence ultimately settles will be important in informing our view for household consumption and the broader outlook for the economy," Mr Fabo said.
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