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Consumer confidence has surged to the highest level more than two years, as Australians express relief that the nation has avoided a recession and an expected sharp rise in job losses, a survey shows.

The private sector survey is the fourth set of recent, positive economic data suggesting the nation could be the first stgeloped country to emerge from the global downturn driven by the financial crisis.

Three surveys for the month of August released over the past few weeks have revealed business confidence at a near six year high, more optimistic trading expectations amongst firms and the first growth in job advertisements in 16 months.

Now, data for September shows the Westpac-Melbourne Institute index of consumer sentiment grew by 5.2 per cent, or 5.9 next points, to 119.3 points.

It is the index’s highest level since July 2007, when it registered 120.8 points.

“This is a truly extraordinary result,” Westpac chief economist Bill Evans said on Wednesday in a statement.

“The standout story is the `relief rally’ for consumers – relief that the economy has avoided recession and that expected job losses have not materialised.”

The index has increased by 34.4 per cent over the past four months, marking the largest four-month increase in its 35-year history.

The survey also showed good news about the economy was drowning out warnings that Reserve Bank of Australia (RBA) could soon be forced to raise official interest rates.

ICAP economist Adam Carr said the data show the federal government’s fiscal stimulus efforts are still working their way through the economy.

“Nominal incomes growth remains robust, the labour market is holding up OK and of course consumer confidence has surged,” he said.

“Talk of looming interest rate hikes doesn’t appear to have dampened confidence any.”

The survey of 1,200 people aged 18 years and over was conducted from August 31 to September 6.

During that period, the Australian Bureau of Statistics released data showing the economy grew in the second quarter of 2009.

It expanded by 0.6 per cent in the three months ended June, after growth of 0.4 per cent in the March quarter.

Meanwhile, the jobless rate is currently around 5.8 per cent, and economists don’t think it will peak anywhere near the 8.5 per cent level forecast by the Treasury in the May budget papers.

Mr Evans said good news about the economy was “drowning out” warnings of impending interest rate rises.

Just 32.6 per cent of respondents could recall hearing news about impending rate hikes, compared to 69.2 per cent who could recall stories about economic conditions.

Meanwhile, 70 per cent of respondents now believe current economic conditions are favourable, up from 35 per cent in June.

“Given the extensive media coverage of likely rate hikes it is surprising that respondents are relatively evenly divided on their assessments of interest rate news,” Mr Evans said.

On September 1, the RBA opted to leave the cash interest rate at its current 49 year low of three per cent.

Debt futures markets have fully priced in a rate rise of 25 basis points for November although some commentators believe a rise could occur next month.

Between October last year and March, the federal government released two stimulus packages that included about $20 billion worth of cash handouts.