Economist says latest consumer survey encouraging but income generation crucial.

Consumer confidence remains at heights not seen since the recession and only briefly before then.

The ANZ Roy Morgan consumer confidence index dipped to 133 from 135.8 in the January survey.

"But that sort of movement is nothing more than noise," ANZ chief economist Cameron Bagrie said. "Our seasonally adjusted estimate shows a minuscule rise, hitting a seven-year high."

It was encouraging that confidence remained high when higher interest rates were well flagged, which was typically negative for sentiment, he said.


That factor appeared to be outweighed by the combination of rising house prices (albeit at a slowing rate of increase), an improving labour market and reasonable income growth.

"A pick-up in consumer spending - to be expected if consumer confidence trends are followed - is to be welcomed, provided it is supported by income generation," he said.

But the size and frequency of wage rises would depend on productivity gains to make them affordable, Bagrie said. "Strong consumer sentiment typically flags the same for spending trends. We're seeing a pick-up, but it's far from all-guns-blazing spending euphoria."

Retail sales are up about 4 per cent on a year ago, but credit card billings are up more strongly and housing credit growth is tracking ahead of income growth.

Bagrie said it was a matter of whether households had reformed their borrow-and-spend ways. "The evidence to date is mixed."

A net 7 per cent of the 1009 respondents say they are better off financially than they were a year ago, down from a net 11 per cent last month.

But they are more optimistic about the outlook, a net 36 per cent expecting to be better off in a year, a net 38 per cent expecting good times for the economy over the next 12 months and a net 37 per cent expecting good economic times to continue over the next five years.