Consumer sentiment rose solidly in January. A lift is typical for this time of year, but it’s more than that – the index is at its highest since April 2015. Economic momentum appears to have started 2017 on a similar footing to how 2016 ended – strongly. Inflation expectations rose, while house price expectations fell.
The summer weather might be dodgy so far, but consumers have started 2017 on a high.
- Consumer sentiment rose solidly in January. A lift is typical for this time of year, but it’s more than that – the index is at its highest since April 2015.
- Economic momentum appears to have started 2017 on a similar footing to how 2016 ended – strongly.
- Inflation expectations rose, while house price expectations fell.
The ANZ-Roy Morgan Consumer Confidence Index rose from 124.5 to 128.7 in January – its highest level since April 2015. To be fair, gains at this time of year are common, with households enjoying that holiday feeling. In seasonally adjusted terms, the lift was more modest, with the index rising 0.3 points to 124.3.
The Current Conditions and Future Conditions Indexes stormed ahead by 5 and 4 points respectively
(although again, seasonally adjusted moves were more modest, while still positive). At 129.8 and 128.1 respectively, the levels for both indexes remain historically high. In terms of the details:
There are good reasons for consumers to be feeling fine.
- December quarter spending numbers may have been a bit of a damp squib, but indicators for concurrent spending remain sunny. A net 11% feel better off financially compared with a year ago; this indicator has been pretty steady for the last six months. Consumer enthusiasm for buying major household items jumped from +38 to +49, the highest since April 2015.
- Forward-looking indicators have a tail wind. Net optimism towards the economy in 1 and 5 years’ time both lifted to a net 25% (up 3 and 7 respectively). Respondents’ views towards their own financial situation in 12 months’ time lifted to a net 34% (up 2).
- All regions are looking pretty bright. The South Island ex-Christchurch is the most optimistic about current conditions, while Wellington has the highest reading on future conditions.
ANZ job ads have grown uninterrupted for the past 16 months, with strength around the country. Inflation has been modest. The outlook for dairy has improved hugely in recent months. The housing market may be leveling out (and indeed, house price inflation expectations fell from 5.4% to 4.3%, the lowest since February 2016) but property-owning households have been given a huge wealth boost.
Barring a storm offshore, it is the behaviour of households that will determine the path of the New Zealand economy from here.
Happy households are of course a good thing, but over-exuberance in terms of borrowing and spending would come at the cost of growth later, and would up the ante on the risks of a boom/bust scenario. Early indications for Q4 spending suggest that households might be feeling good, but they aren’t getting silly. That’s a good thing.
Our confidence composite gauge
(which combines business and consumer sentiment) continues to point to GDP growth accelerating north of 4%.
Capacity constraints (labour and credit availability) probably rule out this actually eventuating, but it’ll be fun trying.
Click here to download the latest ANZ-Roy Morgan New Zealand Consumer Confidence Release PDF - January 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.