Consumer goodwill generated by the Coalition's budget has faded slightly, according to the latest weekly ANZ-Roy Morgan sentiment index, which has slipped after last week's strong showing.
The bank said on Tuesday that its consumer confidence index dropped 1 per cent, to 113.5 points, in the week ended May 24. This compares with a four-week average of 111.9 and a monthly average since the series begun in 1990 of 112.7.
The latest reading has stolen back some of the previous week's post-budget surge of 3.6 per cent, which put the index at its highest point since last November. However, confidence is still up a cumulative 4.4 per cent over the past three weeks.
"The fall of 1 per cent in consumer confidence last week only slightly reverses the lift seen in the previous two weeks," said ANZ chief economist Warren Hogan.
"Confidence now appears to be trending higher following the government's budget.
"In level terms it is hovering just above its long-term average," he said.
Survey data was gleaned from 1000 face-to-face interviews last weekend, meaning respondents had time to further digest the contents and commentary around the Abbott government's second budget, handed down on May 12.
Mr Hogan said despite the latest drop in the index, response to this year's budget "has been much more positive than last year".
Two cuts to the cash rate by the Reserve Bank of Australia this year has also begun to stimulate consumer spending and business investment in some sectors of the economy, according to the central bank and recent data.
However, confidence remained fragile, Mr Hogan warned.
"The lift in confidence is unlikely to be sustained if key measures do not pass through the parliament," he said.
"More importantly, confidence amongst consumers requires job creation and a stable, or better still, falling unemployment rate," he said.
Economists and markets will closely watch this week's capital expenditure data from the Australia Bureau of Statistics for signs of a pick-up in business spending.
