ANZ-Roy Morgan New Zealand Consumer Confidence slipped 1 point to 120 in June, in line with its historical mean. Current conditions remain upbeat, but households are wary about the outlook.
- ANZ-Roy Morgan New Zealand Consumer Confidence slipped 1 point to 120 in June, in line with its historical mean. Current conditions remain upbeat, but households are wary about the outlook.
- Strong labour market conditions and still-low interest rates are supporting household sentiment, but slowing economic growth may be dampening perceived prospects, particularly given the backdrop of high household debt and elevated housing costs.
Consumers are feeling average according to the ANZ-Roy Morgan Consumer Confidence Index, which slipped 1 point to 120 in June – its lowest level since August 2016. On a seasonally adjusted basis the index fell 2 points, also at 120.
The Current Conditions Index rose 1 point to 125.7 in June, exactly in line with its 12-month average and well above its historical average of 116.7. The Future Conditions Index fell 2 points to 116.2; well below its average (121.7).
- Consumers’ perceptions of their current financial situation lost 2 points, with a net 11% feeling financially better off than a year ago.
- A net 26% of consumers expect to be better off financially this time next year, down 1 point.
- A net 40% say it’s a good time to buy a major household item, up 4 points from May.
- Perceptions regarding the next year’s economic outlook eased a further 5 points to +7%, the lowest reading since August 2016. The five-year outlook also dipped, down 1 point to +16%.
- Confidence fell a further 2 points in Auckland, which remains the least confident region. The rest of the North Island is also relatively subdued. Regional South Island and Wellington confidence both slipped 3 points.
- Expectations for national house price inflation dipped from 3.7% y/y to 3.6%, with Wellingtonian expectations no longer leading the pack, down 1%pt to 3.2%. General inflation expectations were unchanged at 3.9%.
ANZ-Roy Morgan New Zealand Consumer Confidence has weakened to average levels over Q2. While perceptions of current conditions remain strong, there is a degree of wariness about the future. The cocktail of moderating economic growth and heightened downside risks to the outlook may be proving a little too bitter for some, particularly given the backdrop of high household debt and elevated housing costs. Nonetheless, labour market conditions are supportive, with a lift in wage growth looking likely, while the housing market remains stable.
In our view, consumer confidence around average isn’t necessarily a bad thing; particularly given we’re late in the cycle. A strong rise in household debt wouldn’t be optimal from a financial stability standpoint, and a modestly higher saving rate wouldn’t go amiss in terms of building household’s resilience for the inevitable rainy day. That said, a sharp drop in consumer confidence from here wouldn’t bode well for the overall activity outlook.
Click here to download the latest ANZ-Roy Morgan New Zealand Consumer Confidence Release PDF - June 2018.
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