Wednesday's survey showed the Westpac-Melbourne Institute Index of Consumer Sentiment rebounded 16.4% to 88.1 in May, recouping much of the 17.7% fall in April - which was the biggest drop since the survey began. 

The survey spanned the period between the 4th and 8th of May, which covered the announcement of the government's three step plan to ease restrictions. 

"This represents an impressive recovery in confidence," Westpac chief economist Bill Evans said.

"Consumers are clearly heartened by Australia’s success in containing the coronavirus which has justified the easing of some of the social restrictions that have been so painful for individuals and the economy over the last two months."

The May turnaround in confidence marks the biggest monthly gain in the index since the survey began nearly fifty years ago, but still remains weak.

"The Index is still relatively weak by historical standards – May being the second lowest read since the Global Financial Crisis and firmly in pessimistic territory," Mr Evans said. 

"The despair apparent a month ago, when Australians were bracing for a severe outbreak and a prolonged shutdown has lifted materially, but consumers are still justifiably cautious."

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                              The survey showed a major improvement in the outlook for the economy over the next 12 months, which rose 32.6%, while the outlook for the next five years increased by 10.7% - a nine month high.

                              "The prospect of an earlier than expected reopening for the economy has soothed some of the worst fears around the economy although readings imply consumers still do not expect a return to growth any time soon," Mr Evans said.

                              "Respondents are clearly confident that the economy will cope with this short-term crisis and emerge in good shape to deal with future challenges.

                              "This is a stark indicator that the current economic crisis cannot be compared with a recession, when respondents despair for the future. The current reading for this component is 50% higher than the average seen during the deep recession in 1989-1991."

                              In hopeful news for retailers, the other big mover was the 'time to buy a major household item' which surged by 26.7% in May. 

                              Mr Evans said the easing of restrictions looks to have had a direct impact, but retailers should expect most consumers to be keeping a tight lid on spending. 

                              "The response suggests retailers can expect more foot traffic as restrictions ease although the overall level of the index still suggests most consumers will be looking to keep spending on a tight rein."

                              The measure of family finances compared to a year ago rose 5.5%, which Mr Evans said could be a sign that support from JobKeeper and JobSeeker policies as well as temporary relief for mortgage and rental payments may be providing more help.

                              Respondents were also more confident about the outlook for job security amid expectations that a return to more normal conditions will allow many workers displaced by the coronavirus shutdown to return to their jobs.

                              "Respondents are much more confident about job security and/or prospects than might be the case given the gloomy outlook for the jobs market that still dominates the media," Mr Evans said.

                              There was also positive news for the housing market, with the 'time to buy a dwelling' index jumping by 31.8% - reversing all of April's 26.6% drop. 

                              However, 'price expectations' remains an "exceptional" weak spot.

                              Consumer expectations for house prices posted a mild 4.6% gain – only a slight reversal from last month’s very large 50% drop.

                              "It is extremely noteworthy that in the midst of this exuberant rebound in confidence prospects for house prices have hardly budged," Mr Evans said.

                              "Notably, expectations in Victoria bucked the modest national trend posting a further deterioration (–11.8%).

                              "The Melbourne housing market looks vulnerable to the sudden slowdown in foreign student and migrant inflows and has already seen some early price slippage. The situation clearly bears watching closely."