Consumer confidence is recovering from the hit it took in the wake of unpopular measures in this year’s federal budget.

When the budget was delivered in May, there was a sharp contrast between how businesses and consumers felt about the economy.

But the latest Westpac-Melbourne Institute survey of Consumer Sentiment, conducted in the first week of August, shows optimism is back on the rise.

The index rose 3.8 per cent to 98.5.

A reading below 100 indicates more people are pessimistic than those who are confident about the future.

Westpac senior economist Matthew Hassan says that is close to its pre-budget level and likely indicates consumers believe unpopular measures either will be watered down or abandoned altogether.

Mr Hassan notes other factors also may have contributed to the improvement.

“We did have in August the repeal of the carbon tax,” he said.

Survey respondents are also more confident about economic conditions over the coming year, but less confident about conditions over the next five years.