Consumers? expectations for the next five years has weakened to levels not seen since 2009.

Consumers? expectations for the next five years has weakened to levels not seen since 2009. Photo: Louie Douvis

Australians are increasingly less confident about the future, with a consumer sentiment reading this month hitting its lowest levels since July.

But the "surprisingly weak" level of consumer confidence this month, as measured by Westpac and the Melbourne Institute, comes amid a strengthening confidence in the business sector.

Job security appears to be the key point of disconnect, analysts say.

"The extent of the decoupling of consumer sentiment from the improvement in business confidence and conditions in recent months is unusual," Citi economists Paul Brennan and Josh Williamson said.

"It appears that until the improvement in business confidence translates into more hiring, consumer sentiment will be held back by concerns about job prospects."

The Westpac/ Melbourne Institute consumer index slipped for the third-straight month for its February reading, as Australians' expectations about the economy over the next year fell to the lowest level since March 2012.

Consumers’ expectations for the next five years along weakened to levels not seen since February 2009, the survey found.

The weak reading on consumer confidence comes just a day after National Australia Bank reported a lift in both business conditions and business confidence for the December quarter.

“The improvements over recent months have established a clear upward trend in business activity, suggesting some upside potential to our current growth outlook, although indicators of employment continue to point to a soft labour market,” NAB said.

For households though, the picture remains somewhat different. 

"This is a surprisingly weak result,"  Westpac's chief economist Bill Evans said of the latest consumer confidence data. 

"Households seem to be sending a fairly clear message in this survey," Mr Evans said.

"It is around questioning why fiscal policy [government spending] is about to be tightened and interest rates lifted when the labour market is so weak and housing affordability is being squeezed."

The Westpac gauge fell from 103.3 in January to 100.2 in February.

The softening labour market weighed on the minds of the survey's respondents, with the unemployment sub-index rising by 2.3 per cent in February.

"The index is at its second highest point since July 2009 – the weakness in the labour market, particularly over the last six months has been taking its toll on households' confidence," Mr Evans said.

The unemployment rate, which has edged up to a four-year high over the past year, is expected to rise further this year as the economy adjusts to lower investment from mining companies.

Meanwhile, wages are growing at their slowest pace since the financial crisis and consumer prices recorded a surprise jump in the fourth-quarter of last year.

"A soft jobs market has opened up the gap between wages growth and domestic inflation," Commonwealth Bank economist Gareth Aird said about the lower levels of confidence.

"This means that consumers feel cost of living pressures more acutely."