There has been a surprise jump in consumer confidence, as the many interest rate cuts delivered through the year finally begin to sway households.
The Westpac-Melbourne Institute consumer sentiment index rose by 5 per cent in November to 104.3.
That is the highest level in a year-and-a-half, and just above the 100 level that suggests there are more optimists than pessimists in the economy.
Westpac chief economist Bill Evans says the boost comes after consumer sentiment remained stubbornly low through the year.
"The long run of interest rate cuts - 150 basis points from the Reserve Bank over the last 12 months - is starting to get some traction," he said.
Mr Evans says sentiment was also likely lifted by the re-election of US president Barack Obama, with a large jump in confidence among 18 to 24-year-olds.
He has described it as a surprising and welcome result, but he is not popping the champagne corks just yet.
"I think it would be way too early to suggest that we're going to get sustained improvement as a result of this one-off result," he said.
Mr Evans still expects the Reserve Bank to cut rates in December, as several other indicators suggest weakness in the economy.
Despite the boost to consumer sentiment the latest survey of company directors has found that confidence is at its lowest level in two years thanks to the slowing local and global economies.
The Australian Institute of Company Directors spoke to more than 500 directors and found that sentiment had dropped dramatically compared to the first half of the year.
Forty per cent of directors think the Australian economy is weak, two thirds expect the economy to slow down.
Institute head John Colvin told that directors still remain concerned about the state of the global and local economies.
"Well I think it's the combination of the high Australian dollar, global economy, consumer confidence and then building in or either effecting those three issues are policy and regulations which make jobs basically harder to do as a director," he said.
Modest wage rise The chances of a rate cut have also been buoyed by a modest rise in wages.
Bureau of Statistics data shows public and private sector wages rose an average 0.7 per cent over the September quarter.
ANZ senior economist Riki Polygenis says it is down from the 1 per cent rise the previous quarter, which is what the Reserve Bank has been hoping for.
"This should give them some comfort that inflationary pressures stemming from the labour market will stay sufficiently curtailed into 2013, so that does pave the way for further rate cuts should they see it necessary on the basis of weakening conditions in the non-mining sector," she said.
The Reserve Bank has been hoping for wage growth to slow to keep inflation low.
Ms Polygenis says it is a win for workers and the RBA "Workers are still benefitting from an increase in their wages, even if it is a bit more moderate than what we have seen in previous quarters," she said.
"But at the same time it will be consistent with the RBA's expectation that inflationary pressures will start to come off in 2013."