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% 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 6% 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.