Consumer confidence rises for second month but still subdued

• Consumer confidence rises for the second straight month.
• Pessimists continue to outweigh optimists - overall sentiment remains subdued.
• Households feel it's still a bad time to buy a major household item.
• Further interest rate cuts could change the mood quickly.

Consumer confidence has risen for the second straight month as households feel more upbeat about future conditions, but overall sentiment remains subdued.

The ANZ Roy Morgan survey showed sentiment up 4 points to 92.2 in August, following last month's 5 point rise - although it remained well below its 10-year average of 109.

A reading below 100 indicated pessimists outweighed the optimists.

Households continued to feel more subdued about current conditions, but they were more optimistic when looking further ahead.

In ongoing bad news for retailers, a net 23 percent felt it was a bad time to buy a major household item, an improvement from last month but still at very low levels.

ANZ chief economist Sharon Zollner said its business outlook survey showed that while retailers were hopeful of better times ahead, consumers were going to need more convincing before opening up their wallets.

"Consumers are feeling a little better, on the whole. Interest rates are falling, but it's because the economy in recent months has been weaker than the Reserve Bank and other punters expected," Zollner said.

"For the person on the street, things are still likely to feel worse before they feel better, due to the fact that the labour market lags the broader economic cycle by around six months, and an increase in unemployment over the rest of the year looks pretty baked in," she said.

Household inflation expectations ticked up marginally to 3.8 percent, but Zollner said they typically overestimated the rate of inflation and the "downward trend remains intact".

House price expectations rose slightly from 2.4 percent to 2.8 percent year-on-year.

"There hasn't been a king hit to incomes or confidence such as a global financial crisis or a natural disaster," Zollner said.

"As such, interest rate cuts could change the mood relatively quickly, though of course it will take quite some time to feed through to disposable incomes in a meaningful way due to the preponderance of fixed rate mortgages," she said.