There are signs that confidence among Australians is returning to more normal levels after the upheaval of dealing with the coronavirus pandemic.

However, Westpac chief economist Bill Evans warns progress in managing the virus and the opening up of economies still remains key to the outlook.

The monthly Westpac-Melbourne Institute consumer sentiment index released on Wednesday roared back by 18 per cent in September after dropping 9.5 per cent in August.

This recovery came despite confirmation last week the nation is in recession for the first time since 1992.

“Clearly this was ‘old news’ with respondents more focused on the future,” Mr Evans said.

He said the confidence fall in August was in reaction to the deteriorating virus situation in Victoria and the introduction to harsh lockdown measures in the state.

Adding to concern was the slump in NSW.

“We suspected last month’s 9.5 per cent collapse in the index was an overreaction but this month’s 18 per cent rebound is a pleasant surprise nonetheless,” Mr Evans said.

However, he said the September survey was completed before last weekend’s announcement by Victorian Premier Andrews of a slow move to reopening its economy.

Consumer confidence is a guide to future household spending.

Every quarter, respondents are surveyed on what news they recall most and their assessment of it.

News on “economic conditions” had a recall of 42 per cent, the highest proportion in nearly nine years.

“News on this front was still assessed as overwhelmingly unfavourable,” Mr Evans said.

However, views on “budget and taxation”, “interest rates” and, most notably, politics received favourable assessments.

Mr Evans said the latter should be welcome news for Australia’s federal and states politicians with an extraordinary 70 per cent of consumers assessing political news as favourable.

“A result unlike any seen in the 45-year history of the survey and further evidence of what is proving to be a very strange recession,” Mr Evans said.