Consumer confidence has lifted to its highest level for more than a year, the Westpac McDermott Miller survey has found.

The quarterly survey's index rose 8.6 points to 111.1 - any reading over 100 indicates more optimists than pessimists.

"The improvement was pervasive," Westpac economist Felix Delbruck said. "Not only have households become more optimistic for the future, but their assessment of their current financial situation is the best it has been in five years."

A net 29 per cent of respondents said it was a good time to buy a major household item. While that is only a modest improvement on the September survey's 27 per cent, it is still the second highest reading for this indicator since the recession.


The lift in confidence adds to evidence, like electronic card transactions, that the weak September quarter was a pothole, rather than a ditch. It comes despite a stream of high-profile layoffs and an unexpectedly steep rise in the unemployment rate to 7.3 per cent.

"Then again, other developments have been more positive: the Canterbury rebuild is accelerating, we've had slightly better news on the global economy, and a continued high exchange rate has helped keep prices for some imported goods low."

Respondents were asked whether they feel better or worse off financially than a year ago. While a net 12 per cent say worse off, that is an improvement on a net 22 per cent of that view three months ago.

Households are now also cautiously optimistic about their financial situation, with a net 8 per cent expecting things to get better over the coming year, the highest since September last year in the lead-up to the Rugby World Cup.

But households remain significantly less upbeat about their finances.

When asked what they would do with a $10,000 windfall, the proportion saying they would use it to pay down debt remains higher than it was in the mid-2000s and the proportion who say they would spend it correspondingly lower.