Consumer sentiment showed good vibrations in January, although it was broadly unchanged when we remove seasonal influences. Such stability is notable considering the negative economic nuances from offshore to start the year. To see stability against this backdrop is a telltale sign the New Zealand economy has considerable localised pep. Prospects for the economy remain solid, amidst international turbulence.
Surf’s up, with consumer confidence remaining high.
- Consumer sentiment showed good vibrations in January, although it was broadly unchanged when we remove seasonal influences.
- Such stability is notable considering the negative economic nuances from offshore to start the year. To see stability against this backdrop is a telltale sign the New Zealand economy has considerable localised pep.
- Prospects for the economy remain solid, amidst international turbulence.
The ANZ-Roy Morgan Consumer Confidence Index rose 3 points to 121.4 in January. Confidence was unchanged after accounting for the summer factor.
We take three key messages from the overall result.
- Levels count as well as the change and confidence levels are elevated. Headline confidence is not only sitting well above the 100 “neutral” level but is in line with the historical average (119). It’s still a case of “fun fun fun”.
- Negative developments offshore have failed to derail local sentiment; for a small economy like New Zealand, this is always a risk, and a plus when it doesn’t happen.
- Solidity in sentiment is testament to the powerful local influences shaping how consumers feel. We take that interpretation over the “head in the sand” one.
The year has started horribly for the global economy. Commodity prices are under huge downward pressure. Equity markets have been thumped. China – one of our top two trading partners (and the world’s second largest economy) – appears under the pump. Financial market volatility is on the rise. That’s hardly a friendly backdrop for sentiment.
But the resilience of the domestic consumer can be put down to a number of factors. We’ve been here before; volatility has been the new norm since the financial crisis and consumers are now far more used to swings and roundabouts. Someone’s pain is another’s gain; consumers win when commodity prices such as oil go down (at least initially for oil importing nations). The benefit of lower interest rates is still flowing into the economy. Regional house prices are lifting sharply. The economy clearly regained momentum in late 2015, such that job creation has picked up strongly. Competitive pressures continue to swat away the inflationary impact of a lower NZD, keeping tradable prices low; that’s good for bargain hunting. Collectively it’s a surfin’ safari.
But being confident does not mean we should be complacent. As a commodity exporting nation, weak global commodity prices and slowing demand do not spell great prospects for our national earning potential. And as a debtor nation, an escalation in global credit market pressures could affect domestic funding costs. We are watching these developments closely. But as we sit here today, they are risks rather than a foregone conclusion.
Our confidence composite points to respectable prospects for the economy heading into 2016. Reality may yet set in, but it’s far easier to navigate turbulence when you have forward momentum than not. New Zealand has that momentum.
Click here to download the ANZ-Roy Morgan New Zealand Consumer Confidence Release PDF - January 2016.
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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.