Consumers are starting to feel a little more optimistic, but confidence remains down in the dumps.
The number of pessimists have outweighed the optimists for eight straight months now, according to the latest Westpac/Melbourne Institute consumer sentiment report.
But confidence has picked up slightly in October, rising 0.9 per cent to 94.8.
A reading below 100 points means there are more pessimists about the economy than optimists.
Although pessimism continues to persist, the result was better than expected given the sharp falls on the share market this month as well as the steep decline in the Australian dollar which hit a four-year low in October, Westpac chief economist Bill Evans said.
Consumers may have been comforted by easing concerns around the federal government's May budget, given the index fell by 6.8 per cent in the wake of its release, he said.
"Households, who reacted negatively to the commonwealth government's May budget, may have been encouraged by recent announcements that a number of budget initiatives have been set aside for the time being," Mr Evans said.
"Possibly in response to more comfort around the budget initiatives, we saw improvements in respondents' assessments of their own finances."
Mr Evans said global developments had sparked consumer concern about the economic outlook while caution was also emerging around the outlook for house prices.
On the plus side, people were feeling more upbeat about job security and employment prospects, he said.
Mr Evans said Westpac maintained its expectations of a rate rise in August 2015.
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