Consumer confidence took a backward step in October, but most of those surveyed are still confident about the Australian economy.

The Westpac/Melbourne Institute index of consumer sentiment in October fell 2.1 per cent to 108.3 points, seasonally adjusted.

It has stayed above 100 points for the the second month in a row indicating that optimists outweighed pessimists. In September the index jumped 4.6 per cent to the highest level since December 2010.

Westpac chief economist Bill Evans said a fall in October from an almost three-year high in September was to be expected.

“The modest fall in the index is probably due to an expected retreat following the positive expectations around the election result,” he said.

“The shutdown of the US government and media speculation around a US government default would also have unnerved respondents.”

Evans said the survey showed there was not much improvement in consumers’ expectations about their own finances for the coming year.

That index only improved 0.8 points from a year ago, which could indicate a reluctance by consumers to spend.

“This lack of response around people’s assessments of their own finances raises some doubts as to whether the healthy reads of the overall index will spur consumers out of their current spending torpor,” he said.

Margy Osmond, CEO of Australian National Retailers’ Associations said despite consumer sentiment falling in October, retailers retailers are expectant consumers will bounce back strongly with critical indicators including ‘a willingness to buy major household items’ maintaining strong growth over several months.

“Retailers are hoping the underlying optimism among consumers will deliver a bumper Christmas shopping period with today’s result still 9.2 per cent above its level a year ago,” Osmond said.

The survey was conducted between September 30 and October 4.

AAP