Consumers are less anxious, which is underpinning business confidence.
But it remains unclear whether this will translate into more jobs.
New data suggests businesses were less chipper in August than during the previous month, but confidence remains close to the improved levels recorded since the 2013 federal election.
However, National Australia Bank's latest survey found business conditions softened during the month after a spike in July, while there was no improvement in employment.
NAB is sticking with its forecast that the jobless rate will peak at 6.5 per cent by the end of 2014.
In the interim, economists expect official figures on Thursday to show the unemployment rate moderated in August to 6.3 per cent after July's jump to a 12-year high of 6.4 per cent.
ANZ chief economist Warren Hogan is encouraged that job advertising suggests demand for workers is gradually strengthening.
The ANZ-Roy Morgan consumer confidence gauge released on Tuesday rose 0.6 per cent amid further signs of stabilising after earlier wild swings.
"Overall the consumer remains anxious but not as much as during the recent budget debate and implies moderate ongoing retail sales," NAB chief economist Alan Oster said.
He said construction activity in the NAB survey was also elevated.
The housing market remains the shining light of the economy and looks set to be the driving force for growth in the next year.
Other data shows demand for owner-occupier mortgages rose 0.3 per cent in July to 52,251 loans. However, investors appear to have the upper hand: the loans were valued at $11.5 billion, which is a 6.8 per cent jump from a month earlier.
The proportion of first-home buyers taking out a loan in July shrunk to a record low of 12.2 per cent.
Commonwealth Securities economist Savanth Sebastian said this was despite some of the most attractive buying conditions in years.
"There is anecdotal evidence that some first-home buyers are being squeezed out by investors given tight housing supply," he said.
But he said it also reflected the preference of young people to rent, rather than buy.
Share
