Australians are planning for a “normal” Christmas, as an indicator of consumer confidence hits a seven-year high.

The Westpac-Melbourne Institute consumer sentiment survey rose by 2.5 per cent in November, its third monthly rise in a row.

The survey, which measures how people are feeling about their finances as well as the broader economy, is now tracking 13 per cent above where it was for the six months before the pandemic hitting in March.

Victorians had the biggest improvement in confidence, with sentiment in the state rising 9 per cent, as coronavirus restrictions eased, in addition to further interest rate cuts and personal tax cuts.

The survey was conducted between November 2 and 6 when the Reserve Bank slashed the official cash rate to 0.1 per cent and announced it would buy more federal government bonds to assist with the economic recovery.

This month, Westpac also surveyed people’s spending intentions ahead of Christmas.

It found 11.5 per cent of those surveyed expected to spend more this year than in previous years, whereas 32.3 per cent expected to spend less, which was within the range of responses seen over the past five years.

“Given the high degree of uncertainty this Christmas, and the headwinds from the high unemployment rate, it is a very encouraging sign that Australians are planning for a normal Christmas,” Westpac chief economist Bill Evans said.

Consumer sentiment appears to be recovering after the COVID-19 pandemic. Photo: ABC News/Alistair Kroie

Mr Evans said high consumer sentiment was “undoubtably” because of Australia’s success in dealing with coronavirus.

“We are now at a seven-year high, so Australians are really indicating after the doom and gloom period of the lockdown they are looking forward to a positive future,” he said.

Mr Evans said the results of the survey were proof of “the power of interest rates”.

“One aspect of the survey that’s most outstanding is strong confidence in the housing market, that’s spilling over to general confidence,” he said.

Westpac chief economist Bill Evans says the latest consumer sentiment survey showed the power interest rates can have on consumer confidence. Photo: ABC News/Scott Jewell

However, Mr Evans did have doubts about positive sentiment continuing.

“A seven-year high at a time when the unemployment rate is heading towards eight per cent might be a difficult thing to sustain.”

He said the survey on Christmas spending showed Australians were going back to “normality” for Christmas.

Families on spending less this Christmas

Natasha Pain and her family will be reining in their spending this Christmas.

“We might not do presents this year. If we do, it’ll probably be something small … certainly not like $100 for every person,” she said.

I think everyone (in my family) is kind of on the same page and everyone is pretty understanding that that might be the best idea this year.

After coming out of Melbourne’s lockdown, Natasha Pain says her Christmas this year will be focused more on spending time with her family. Photo: ABC News/Natasha Pain

Ms Pain lost her retail job in March when nationwide shutdowns began and with Melbourne’s Stage 4 lockdown, she spent many months this year without that income.

“In the first stage of JobKeeper, the company that runs the centre I work for, they were eligible for JobKeeper, so I was on that,” she said.

“But when those eligibility requirements were revised, the company was no longer eligible, therefore I couldn’t get JobKeeper, so that was pretty difficult.”

Ms Pain was able to make a little cash by live-streaming yoga classes from her lounge room.

“Having that little bit of income from teaching yoga, and having JobKeeper earlier in the year, that was pretty good,” she told ABC News.

But she said the past few months had been harder and Ms Pain and her fiance had been watching their spending.

“For example, we’ve been picking and choosing what we should get for takeaway this week, if at all,” she said.

“Little things like that.”

Natasha Pain and her fiance have struggled through job losses due to the pandemic. Photo: ABC News/Natasha Pain

Her fiance, who was working in hospitality while completing his final year of study, lost his part-time job in March and only last week started a new role after graduating.

But they’re not flinging open their wallets just yet.

“There’s still another month until the pay cheques start to roll in, so we’re still hanging on to our budget at the moment.”

Christmas this year for Ms Pain will be less about spending money and more about spending time with her family.

“I haven’t seen my family since last Christmas, so I think it’s going to be more like a reunion and sharing a meal together and playing some daggy boardgames – just enjoying family time.”

One thing Ms Pain has recently splashed out on though, is return airfares to Sydney, buying a ticket the day it was revealed the New South Wales and Victorian border would be opening up.

“I’m glad I did because the prices of those have gone up, so I think I snagged a bit of a saving there,” she said.

While Ms Pain won’t be sending much money this Christmas because the COVID-19 pandemic has meant a hit to her finances, she says there is a silver lining.

“It has absolutely made me appreciate family so much, technology is amazing, FaceTime is amazing, but I just want to give my mum a squeeze.”

Australians want to give back to those who need it

The Nguyen family will be spending less money on gifts for themselves this Christmas.

“Our approach to Christmas this year will be focusing on how we can help others,” mum Julie Nguyen said.

We’ll be spending a bit less than what we normally would be because we want to be giving more to others less fortunate than us.

Julie Nguyen (right) with daughter Sienna, son CJ and husband Steven, family are spending less on Christmas this year so they can give back to others who are struggling. Photo: ABC News/Rachel Pupazzoni

Nine-year-old Sienna has asked her mum to buy a present to put under the giving tree at her school for families affected by the drought.

While they might not be buying as many gifts for themselves, the Nguyens will be eating out a bit more.

“We do still want to take them out to give back to the economy because some businesses are doing it tough,” dad Steven Nguyen told ABC News.

“In terms of spending, we’ll just be a bit more careful what we’re spending on.”

The Nguyen family say they will spend less on gifts but treat themselves to a few more dinners out. Photo: ABC News/Rachel Pupazzoni

The family is also looking forward to a small holiday to Canberra after son CJ’s school trip was cancelled because of the pandemic.

“Big holidays nowadays are not on the cards, but a short holiday within Australia will be great,” Mr Nguyen said.

While the Nguyens will be more considered in their spending this Christmas, 11-year-old CJ is hoping his wish list item of a trampoline still makes the cut.

Retailers hope shoppers open their wallets

Retailers, especially department stores, hope Australians spend big this year. Photo: ABC News/Rachel Pupazzoni

As with every year, retailers are hoping consumers open their wallets during the traditionally busy Christmas period.

The latest reading from the Australian Bureau of Statistics shows that despite a fall in spending last month, retail trade in the September quarter was up 6.5 per cent after falling in the June quarter.

Department store sales have been particularly volatile this year, falling 14.9 per cent in April before a meteoric rise of 44.4 per cent in May.

The volatility has continued since then – just without such huge swings.

Stephanie Trevor, the regional manager of David Jones’s Sydney CBD store, hopes Christmas and the easing threat of coronavirus infections in Australia will encourage shoppers to venture out.

“It’s a really busy time of the year I think, where everyone gets to come out to experience retail at its best,” she said.

“I think we’ve really learnt to appreciate those things we took for granted, so I think everyone’s really keen to get out and have a bit of normality.”

Ms Trevor said shoppers were feeling better about their circumstances than they did earlier in the year.

“The sentiment of the customers is definitely a lot more positive,” she said.

Everyone wants a bit of normality, but it’s also something that’s full of joy and I think they look forward to coming out for Christmas.

-ABC