Australia's consumer confidence strengthened in November, but the Christmas spending is likely to be weak, survey data from Westpac showed on Wednesday.
The Westpac-Melbourne Institute Index of Consumer Sentiment rose to 97 in November from 92.8 in October. All index components of the indicator rose in November.
The consumer confidence index increase 4.5 percent monthly in November, after a 5.5 percent fall in the preceding month.
The pattern of confidence falling in response to a rate cut and recovering when the Reserve Bank of Australia remains on hold repeats, Westpac Chief Economist Bill Evans said.
"This result continues to support the general view that consumers are somewhat unnerved by the announcement of low rates and media controversy around the banks' responses," Evans added.
Consumer views on the economy improved in November, but continued to signal a marked weakening in recent months.
Expectations of family finances have been resilient over the last two months and slightly solid overall.
However, consumer attitudes towards spending seemed downbeat heading into the all-important Christmas sales period, Westpac said.
The 'time to buy a major household item' sub-index rose 3 percent monthly to 117.9, which was still 4 percent below its August level and below its long-term average of 127.
This indicates that consumers are set to tighten their belts this holiday season.
Westpac also said that "a restrained attitude towards spending" was also evident in responses to their annual question on Christmas spending plans.
One in three Australians are planning trim their expenditure on gifts than they did last year, with a further 54 percent expecting to spend about the same. Only 11 percent of consumers are planning to spend more this year, the survey said.
The unemployment expectations index increased 3.6 percent to 136.5 in November, marking the highest reading since June 2017. This suggest that more consumers expect joblessness to rise in the year ahead.
Evans expects the RBA to hold rates steady in the next policy session on December 3.
"Recent publications from the Bank indicate that it is prepared to take more time to assess the impact of the three cuts we have already seen," Evans said.
"However, the Board retains a clear easing bias and we expect it to act on this bias next February with a further 25bp rate cut."