Concerns about the economic outlook are weighing on consumers, but confidence levels are still well above their long-run average.
The latest ANZ-Roy Morgan weekly consumer confidence index dipped 0.6 per cent in the week to Sunday, after reaching the highest level in almost two years in the previous week.
People were mainly worried about the outlook for the economy in the coming 12 months and next five years.
However, ANZ chief economist Warren Hogan said confidence still remains elevated and the four-week moving average continues to trend higher.
"This is a good sign ahead of the critical Christmas retail season," he said.
"Households remain confident in the new government as shown in recent news polls."
Mr Hogan said a 3.4 per cent bounce in views about future finances probably reflects improved job security following last week's strong labour market data.
Australia's unemployment rate fell to 5.9 per cent in October, while the total number of people with jobs surged by 58,600.
"While momentum in the economy appears solid at the moment, further softening in the housing market could be a challenge for confidence in the months ahead," Mr Hogan said.
"It is (also) too early to ascertain whether last week's terrorist attacks in Paris and Beirut have had an impact."
The measure on whether consumers felt now was a good time to buy a major household item was flat following falls in the previous fortnight, which is consistent with lower home auction clearance rates.
