Consumer sentiment fell further, and is back below historical averages. Consumers are less confident about the economy over the year ahead, but remain relatively upbeat about their own household’s situation. House price expectations remain elevated but divergent, with a clear Auckland versus the rest of New Zealand theme apparent.
ANZ-Roy Morgan New Zealand Consumer Confidence has cooled.
- Consumer sentiment fell further, and is back below historical averages.
- Consumers are less confident about the economy over the year ahead, but remain relatively upbeat about their own household’s situation.
- House price expectations remain elevated but divergent, with a clear Auckland versus the rest of New Zealand theme apparent.
The ANZ-Roy Morgan Consumer Confidence Index fell a further 6 points in July from 119.9 to 113.9, the lowest level in almost three years. Sentiment has fallen 15 points so far this year and is now below its historical average (119.1). A winter chill has descended.
Key results included:
- A net 4% believe they are financially better off compared to last year. A slightly chillier result than last month.
- One-year-ahead expectations regarding the economy hit some black ice, skidding from +11 to -2 – the lowest in close to three years. Sentiment regarding the economy’s performance five years ahead also took a slide, falling from +17 to +11.
- It’s still perceived to be a good time to buy a major household item (+34, down from +38), although this is the lowest reading in 18 months.
- The Current Conditions Index (a concurrent indicator of spending trends) hit a 22 month low, falling from 122.6 to 119.0 – add another warm layer!
- The Future Conditions Index eased from 118.1 to 110.4 – a three-year low suggesting the chill will linger.
- The regional North Island showed the largest fall in consumer sentiment in July; stress in the dairy sector is an obvious catalyst.
- However, future expectations also fell sharply in Auckland and Wellington.
Sentiment typically cools at this time of year, as the winter blues set in. And it has indeed been a cold winter so far. But there are clearly other forces at play too: our seasonally adjusted estimates also recorded falls (albeit slightly more modest) over the month.
There are clear reasons why consumers are feeling the need to put on additional warm layers.
Economic headwinds have intensified and the impact of weaker dairy prices is beginning to percolate through the regions. The growth impetus from the earthquake rebuild is fading and global ructions and risks are clear to see. An icy economic wind has blown through recently. But the fire has not been completely extinguished yet. Importantly, consumers remain relatively more upbeat about their own households’ prospects going forward. Yes, higher petrol prices have hit discretionary cash flow and the weaker NZD chills what has been a strong real purchasing power story. However, the labour market remains reasonably solid, mortgage interest rates are falling, and nationwide house prices are still rising. There is certainly a need to keep a close eye on the economic “weather conditions” – it is possible that things will cool further in the near term. But the base embers to re-ignite the economy are still evident. A lower OCR and weaker NZD, and the economy’s solid microeconomic foundations, should eventually help stoke the economy’s fire and get it burning merrily again.
Click here to download the full ANZ-Roy Morgan New Zealand Consumer Confidence Release PDF - July 2015.
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Related Research Reports
The latest Roy Morgan Consumer Confidence Monthly Report is available on the Roy Morgan Online Store. It provides demographic breakdowns for Age, Sex, State, Region (Capital Cities/ Country), Generations, Lifecycle, Socio-Economic Scale, Work Status, Occupation, Home Ownership, Voting Intention, Roy Morgan Value Segments and more.
You can also view our monitor of Quarterly New Zealand Unemployment & Under-employment Estimates.