Consumer confidence has soared by its biggest margin in 22 years, a survey says, while home loan numbers also keep growing.
The big monthly jump for June in the Westpac-Melbourne Institute consumer index has led one economist to describe it as ``a truly remarkable result'', on the back of earlier data showing the economy had avoided recession.
But there is a warning about a likely return to negative sentiment later in the year.
The national accounts - released last week - showed gross domestic product (GDP) grew by 0.4 per cent in the first three months of the year, avoiding a second quarter of negative growth that defines a technical recession.
The Westpac-Melbourne Institute consumer sentiment index jumped 12.7 per cent in June, the second-largest increase since the survey began in 1974 and the largest increase in 22 years.
The sentiment index at 100.1 in June is at its highest level since January 2008 when the unemployment was 4.3 per cent and the economy was growing at four per cent per annum.
"This is a truly remarkable result,'' Westpac chief economist Bill Evans said on Wednesday.
"It is very likely that the dominant factor behind this extraordinary rise was the release of the March quarter national accounts.''
From a consumer's perspective this "extremely encouraging news'' comes on top of 385 basis points of cuts in the variable mortgage rate, the government's cash handouts and an unemployment rate that actual fell in April.
"So on the assumption that Australia had avoided a recession and the worst had passed, consumers have become much more confident,'' he said.
But Mr Evans warned the positive reaction in June was probably premature, saying the latest national accounts still portrayed a very weak economy.
The result was bolstered largely by a 2.2 percentage point contribution from exports as imports slumped 7.0 per cent.
Mr Evans expects the export effect to partially reverse in the next two quarters with GDP registering consecutive negative quarters of growth and re-establishing the ``recession'' label.
"This points to a potential negative shock to sentiment when the June GDP figures are released in September,'' he said.
Demand for mortgages has grown for a seventh straight month, with first time home buyers making up a record proportion of loans secured in April.
Housing finance for owner-occupiers rose by a seasonally-adjusted 0.9 per cent in April to 60,395 loans, the Australian Bureau of Statistics said today.
Economists' forecasts had centred on a 1.5 per cent increase in the number of owner-occupier housing finance commitments in April.
Low mortgage rates and a more generous first homeowner's grant lifted the proportion of loans taken up by first home buyers to a record 28 per cent in the month.
It was unclear in April whether the Rudd government would extend its more generous grant beyond June 30 in the May budget, which may have caused a further spurt of interest in securing properties to beat the deadline.
In the event, Treasurer Wayne Swan extended the increased grant until September 30, after which it is to be scaled back over the rest of the year before returning to pre-October 2008 levels next year.
The grant was doubled to $14,000 for established homes and trebled to $21,000 for new properties as part of the government's first stimulus package in October last year.
After September 30 it will be reduced to $10,500 for established homes and $14,000 for new homes until December 3
