Consumer sentiment was largely unchanged in February holding onto buoyant levels. Robust sentiment flags the same for spending trends. Stability in sentiment is tremendously encouraging given darkening global clouds. It’s another sign of economic resilience.
It’s steady as she goes for the New Zealand consumer.
- Consumer sentiment was largely unchanged in February holding onto buoyant levels.
- Robust sentiment flags the same for spending trends.
- Stability in sentiment is tremendously encouraging given darkening global clouds. It’s another sign of economic resilience.
The ANZ-Roy Morgan Consumer Confidence Index remained at a decent level in February, dipping 2 points to 119.7 (to around its historical average).
For the third consecutive month, confidence was unchanged once seasonal influences are removed.
In terms of detail:
- Confidence in the economy remained on course. Net optimism in the economic outlook one and five years ahead rose two points and fell two points to +8 and +15 respectively. The former remains in line with its historical average and hardly points to consumers abandoning ship.
- A net 9% of respondents are feeling financially better off than 12 months ago. That is up one point from January. Expectations 12 months ahead eased 5 points to +27, but the level is respectable. Feeling better off financially is a necessary condition to opening the wallet; we have that.
- A net 40% believe it is a good time to buy a major household item. This is down 4 points from January, but is still the second highest level for the past nine months. Ahoy there!
- The Current Conditions Index dipped 2 points to 124.3, but is still the second highest level since June last year; a country mile from a rudderless outcome.
- The Future Conditions Index also fell 2 points to 116.7.
- Confidence rose in Auckland and Wellington (in seasonally adjusted terms), but fell in both regional North and South Island.
It’s been a rough start to the year for the global economy. Equities and bond yields have tumbled, and credit markets have deteriorated. Chicken Little proponents have a lot (we’d say too much) to say.
The New Zealand economy is not immune from global pressures. We are a small, commodity dependent, debtor nation. In fact, falling export prices (and not just dairy), a stubborn NZD and rising local funding costs have already delivered a meaningful tightening in local financial conditions. If sustained, it portends of more modest growth ahead.
That’s a backdrop where we need to be alert to subtle shifts in sentiment locally. Movement in financial variables are one thing; people need to feel it on the ground before you see real impact. Time and time again, consumer confidence (and the business equivalent) has proven adept at picking turning points in the economy. Confidence is not the key driver of growth across the economy, but growth certainly goes AWOL when you don’t have it.
The continued buoyancy of consumer sentiment is tremendously encouraging. Just as there are global headwinds to navigate, the economy has tailwinds at its back. The labour market is improving, regional housing markets are booming, and households have received a massive cash-flow boost in the form of petrol and mortgage rate falls. Beyond dairy, the tourism and construction sectors remain out-performers. Record net migration inflows are a vote of confidence in the economy more generally. Beyond this, a smaller current account deficit and reduced external debt show that the economy is more structurally ship-shape than it has been in the not-too-distant past.
Our confidence composite continues to point to respectable prospects for the economy heading into 2016. We are picking the same. There are risks to monitor and choppy global seas to navigate. Consumers appear happier in calmer local waters.
Click here to download the ANZ-Roy Morgan New Zealand Consumer Confidence Release PDF - February 2016.
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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.