Small lift off lows for ANZ-Roy Morgan New Zealand Consumer Confidence

• ANZ-Roy Morgan New Zealand Consumer Confidence lifted 6 points from 80.3 in April to 86.5 in May. It’s a relatively small bounce in context: the index is still down 21 points from its January peak.

• The net proportion of households thinking it’s a 'good time to buy' a major household item (the best retail indicator) rose 5 points to -20.

• Inflation expectations (2-years ahead) eased from 6.6% in April to 5.3% in May, while house price expectations dropped 0.7ppts to 2.6%.

• New Zealand's Capital City Wellington is much more downbeat than the rest of the country.

Figure 1. ANZ-Roy Morgan New Zealand Consumer Confidence

Turning to the detail (see charts on page 4 of the linked PDF):

• The future conditions index made up of forward-looking questions lifted from 85.9 to 92.7. But here and now, times are tough: the current conditions index lifted 5 points but at 77.2 it remains very soft.

• Net perceptions of current personal financial situations (better or worse off than last year) lifted from -31% to -25%, with 23% (up 3% points) of respondents saying they are 'better off' financially than this time a year ago compared to nearly half, 48% (down 3% points) that say they are 'worse off' financially, with the result likely assisted by easing petrol prices.

• Looking forward, a net 12% of respondents expect to be 'better off' this time next year, up 9 points which includes a plurality of 38% (up 3% points) saying they will be 'better off' financially this time next year compared to 26% (down 6% points) expecting to be 'worse off'.

• A net 20% think it’s a bad time to buy a major household item, a 5 point improvement but still a very low read with almost half, 49% (down 3% points) saying it's a 'bad time to buy' major household items compared to only 29% (up 2% points) who say it's a 'good time to buy'.

• Net perceptions regarding the economic outlook over the next 12 months lifted from -48% to -36% while the 5-year-ahead measure fell 1 point to +2%.

• House price inflation expectations fell from 3.2% to 2.6%, with the range being 1.5% (Wellington) to 3.2% (Canterbury).

• Two-year-ahead CPI inflation expectations eased from last month’s startling read of 6.6%, a record high, to 5.3%, more in line with the COVID era.

Figure 2 of the linked PDF shows ANZ-Roy Morgan New Zealand Consumer Confidence and petrol prices (inverted). The two don’t always move together, but the correlation has been striking of late. This month, petrol prices have eased a touch and consumer confidence has lifted a little. However, the ongoing soft levels of confidence are bad news for retailers. Our May ANZ card spend chart pack will be out next week – in March and April it has shown discretionary spending taking a hit as households adjust to higher petrol costs.