ANZ-Roy Morgan New Zealand Consumer Confidence virtually unchanged in August at 98.0

Holding in

• ANZ-Roy Morgan New Zealand Consumer Confidence eased 1 point in August to 98.0, still under par but 18 points higher than its April low.
• The net proportion of households thinking it’s a good time to buy a major household item fell 5 points to -12, suggesting retail remains a tough gig.
• Inflation expectations (2-years ahead) were little changed at 4.7%. House price expectations eased from 2.6% to 2.5%.

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

• The future conditions index lifted marginally from 106.5 to 107.7. The current conditions index, however, eased from 88.5 to 83.4.
• After improving last month, perceptions of current personal financial situations (better or worse off than last year) gave up much of its gains, with the net figure falling from -16% to -21% with only 25% (down 1% point) saying they are 'better off' financially than a year ago compared to 46% (up 4% points) that say they are 'worse off'.
• Looking forward, a net 22% of respondents expect to be better off this time next year with 44% (unchanged) saying they will be 'better off' financially this time next year compared to 22% (down 1% point) that say they will be 'worse off' financially, the strongest reading since January.
• A net 12% think it’s a bad time to buy a major household item, a 5-point fall with 47% (up 4% points) saying it's a 'bad time to buy' major household items compared to only 35% (down 1% point) that say it's a 'good time to buy'.
• Net perceptions regarding the economic outlook over the next 12 months improved 1 point to -12%. The 5-year-ahead measure also rose 1 point, to +13%, its strongest reading since May 2021!
• House price inflation expectations eased from 2.6% to 2.5%.
• Two-year-ahead CPI inflation expectations were little changed at 4.7%.

August has been a relatively quiet month in the context of the ructions in previous months, so in that context it perhaps isn’t surprising that ANZ-Roy Morgan New Zealand Consumer Confidence is also little changed. Petrol prices averaged a higher level than in July, having jumped in the last week of the previous month, and that may have impacted perceptions of current financial situations. However, petrol prices have been relatively stable since the start of the month.

The view

The New Zealand economy has emerged from the sudden chill that bit when oil prices exploded higher at the end of February. But oil prices remain unpredictable and uncertainty about the economic outlook remains a headwind. Households remain cautious about their spending plans, but a five-year high in the net proportion expecting better times over the next five years suggests there is a degree of optimism that current trials and tribulations are temporary. Our ANZ card spending data shows discretionary spending has been volatile recently and remains subject to the whims of petrol prices. However, it is trending higher as the situation in the Middle East to some extent fades into the background. The real income effects of the oil shock persist – New Zealand is poorer when the price of an imported necessity rises. But some of the confidence impact appears to be fading.