The ANZ-Roy Morgan consumer confidence index rose by 2.4% last week, to its highest level since early April.
It was a welcome turnaround in consumer sentiment, after the index tracked lower over the preceding two weeks amid concerns around household finances.
The weekly reading of 114.5 was above the long-term average of 112.9.
The release of retail sales at 11:30am AEST will provide another gauge of how Australian consumers are feeling.
“The rise in confidence likely reflects ongoing strength in the labour market and appears to have outweighed consumers’ concerns about the rise in retail electricity prices,” said ANZ chief economist David Plank.
Last week saw a continuation of the recent volatility in consumers’ view towards household finances, with sentiment towards current financial conditions jumping by 3.8%.
The outlook for future financial conditions was slightly less optimistic, with a 0.8% rise.
Consumers’ outlook for the broader economy was also more positive, with view towards current and future economic conditions both rising by more than 3%. Views towards current economic conditions is now at its highest level since mid-March.
Despite a solid rise in sentiment last week, Plank remained relatively cautious in his outlook for consumer confidence. He highlighted the continued headwinds to the economy from high household debt, and noted the recent slowdown in housing construction.
In summary, Plank took the view that a stronger labour market would continue to hold consumer confidence levels steady.
“Overall, the labour market will remain an important influence on confidence over the coming months. While we expect the pace of jobs growth to moderate – given that the official figures have largely caught up with survey measures such as ANZ Job Ads – a strengthening labour market should continue to broadly support confidence.”