SYDNEY - Consumers are set to head into Christmas on a high, armed with improved confidence about current and future economic conditions.

Views towards economic conditions have risen for the third straight week, underlining the sustained turnaround in overall sentiment since August.

The last ANZ-Roy Morgan Consumer Confidence Index reading for the year shows a 1.2 per cent bounce to 116.5 points in the week to December 17.

The strong finish indicates that confidence has recovered substantially after a sustained decrease in the first half of 2017, most recently due to an upswing in sentiment around economic conditions, ANZ's head of Australian economics David Plank said.

"Views towards overall economic conditions are now at their highest point in 2017, and within striking distance of their long-term average," he said.

"This likely reflects the extraordinary labour market performance through the year, and a pickup in activity over the second half."

The index showed a broad-based increase, with all sub-indices except "time to buy a household item" posting gains.

Sentiment towards current economic conditions rose 2.4 per cent while sentiment towards future economic conditions lifted 1.1 per cent.

Views towards current financial conditions jumped a solid 3.6 per cent last week, more than offsetting the 2.7 per cent fall in the previous week.

Outlook for future financial conditions also ticked up, by 0.5 per cent, partly offsetting a 2.8 per cent fall in the week before.

However, sentiment around the "time to buy a household item" fell 1.2 per cent last week, while inflation expectations remained stable at 4.5 per cent.

Mr Plank said the faltering near-term confidence in financial conditions, even as views towards economic conditions had bounced, reflected a number of headwinds that consumers have faced in 2017, such as persistently weak wage growth and high household debt.

"As such, we believe that, a pickup in wage growth is the key to a further improvement in confidence over 2018," he said.

The first weekly index reading for 2018 is scheduled for release on January 9.

 

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