Battered consumers have recovered a smidge of confidence that the Reserve Bank is coming to the end of its interest rate hiking cycle.
Confidence levels lifted 3.2 points but failed to crack the 80 mark, which is well below long-run averages, and have been stuck there for several months.
The ANZ and Roy Morgan weekly measure was buoyed by a sharp 5.7-point lift in "future financial conditions" as the latest batch of economic data bolstered the case for an extended interest rate pause.
The Reserve Bank of Australia board is due to meet on Tuesday for its August rates call.
Central banks around the world have been lifting interest rates to combat high inflation, but are coming to the end of their hiking cycles.
The RBA board paused interest rates at 4.1 per cent in July, but it is likely to be a close call between another 25 basis point hike and a second month on hold for August.
The futures market was confident the central bank would hold fire, pricing in less than a 10 per cent chance of a rate rise.
But economists were conflicted, with a Reuters poll revealing a slender majority in favour of a rise.
Treasurer Jim Chalmers said borrowers coming off low fixed rates to more expensive options were particularly vulnerable, although the peak of these expiring loans had already passed.
"About 19 per cent of people with a fixed loan came off in the June quarter,'' he told ABC Radio.
"We expect about 17 per cent to come off in the September quarter, which is fewer than in June but still a substantial number."
While Dr Chalmers was unable to comment on the RBA's upcoming decision, he said the central bank would likely take moderating inflation into account.
The consumer price index grew by six per cent annually in the June quarter, down from seven per cent through to March.
The all-important quarterly consumer price index came in below the RBA's own predictions, but prices are still rising much faster than the two-to-three per cent target.
The official index also revealed a few lingering sources of inflation to worry about, including rents.
Retail sales also moderated by more than expected in June, suggesting consumers are already tightening their belts and that higher interest rates are already working to cool demand.
However, business conditions proved resilient, as did the jobs market, suggesting there is still a fair bit of heat in the economy.
The housing market has also started to rebound strongly, which could make people feel wealthy and prompt them to spend more.
CoreLogic's national home value index rose 0.7 per cent in July, lifting for the fifth month in a row, but the pace of growth has started to slow.
A slowdown in the manufacturing sector has also started to stabilise, with the July purchasing managers index still in contractionary territory but improving.
Judo Bank chief economic adviser Warren Hogan said the results suggested the worst of the pullback in manufacturing activity was over and there were no signs of a looming recession in the data.
"Further evidence of a soft landing for manufacturing, combined with another solid employment index, suggests that Australia's economy remains resilient and will continue to perform well over the second half of 2023," Mr Hogan said.
© AAP 2023