Employees' confidence about the year ahead has risen from record lows but there are still more pessimists than optimists.
The Westpac McDermott Miller employment confidence index shows while the labour market is still ugly, employees expect it to improve in coming months - a shift that's likely to surprise the cental bank.
The survey shows employees are earning no more than a year ago, and view jobs as hard to come by - but they are more upbeat about the job market's prospects.
The employment confidence index increased 3 points to 96.1 in the June quarter, although it's still in pessimistic territory. A reading below 100 indicates that pessimists outnumber optimists.
Westpac says uncertainty over job security is weighing heavily on confidence, but there's been a shift in sentiment around the outlook for the labour market over the coming year.
Expectations of job availability in a year improved - with only 9% of respondents expecting difficulty, compared with 28% in the March quarter.
Westpac says that's likely to be a surprise to the Reserve Bank, which forecasts rising unemployment and extremely weak consumer spending over the next year.
Westpac says the employment index results imply consumers may not be as cautious as the central bank thinks, although it still expects the official cash rate to remain on hold until late 2010, early 2011.