ANZ-Roy Morgan New Zealand Consumer Confidence hit a three-year high in September. It points to an ongoing decent pace of spending and activity growth. The softer housing market and election uncertainty have failed to dent consumer optimism.
- ANZ-Roy Morgan New Zealand Consumer Confidence hit a three-year high in September. It points to an ongoing decent pace of spending and activity growth.
- The softer housing market and election uncertainty have failed to dent consumer optimism.
- House price expectations cooled further, while inflation expectations were steady.
Nothing appears able to clip consumers’ wings at present. The ANZ-Roy Morgan Consumer Confidence Index lifted from 126.2 to 129.9 in September, which is the highest level since July 2014. Once we adjust for seasonality, the index rose by 2 points to also be at its highest level since July 2014. After its recent low in April, the seasonally adjusted index has surged over 15 points.
In terms of the details, it was a broad-base story of optimism. The Current Conditions Index lifted 2.4 points to 127.3, while Future Conditions lifted 4.5 points to 131.6. It was a similar story in seasonally adjusted terms.
- Consumers feel wealthier. A net 19% feel financially better off than a year ago, a reading that has soared to the highest level since December 2007. Views regarding their own financial situation in 12 months’ time lifted to +36 (+35 previously) – a three-year high.
- A net 36% believe it’s a good time to buy a major household item. History would suggest the weaker housing market will dent big-ticket spending, but there is little sign of that yet.
- Perceptions on the economic outlook ascended. Net optimism towards the economy one year out lifted from +25 to +30, and when assessing the five-year outlook, optimism lifted from +21 to +29.
- Regionally, confidence rose in Auckland, Canterbury, and regional North Island, was steady in Wellington, and dipped in regional South Island.
History suggests consumers would normally be feeling a little more turbulence by now. A softer housing market (prices are now reversing modestly in Auckland), has typically presaged a reduction in consumers’ appetite to spend. Together with the uncertainty over who will be Prime Minister next month, one could have been forgiven for thinking that consumers would be in a slightly more cautious mood at present.
However, that is not the case. The seat belt sign remains off and the hot beverage cart is doing the rounds. That fact that sentiment is not only elevated, but rising, is quite a healthy sign. It reinforces that while the fortunes of the housing market are not immaterial for the economy’s ultimate direction and performance, there are numerous other factors that are ensuring an undercurrent of positivity remains. The labour market is strong, as is household income growth. In part, the latter reflects improved farm-gate prospects in the rural sector as New Zealand’s commodity prices have lifted. And even though there is uncertainty around the election outcome itself, what is clear is that the fiscal impulse over 2018/19 looks large as spending promises are flowing thick and fast.
It means that despite housing headwinds, the economy can continue to record a decent pace of activity growth. Our confidence composite gauge (which combines business and consumer sentiment, and so covers both the production and spending sides of the economy) continues to flag strong economic momentum. Admittedly, we think that it is unlikely that we’ll get to the 4%+ rates of GDP growth this gauge is signalling, but it is certainly not pointing to the economy needing to come in for an emergency landing.
Click here to download the latest ANZ-Roy Morgan New Zealand Consumer Confidence Release PDF - September 2017.
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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.