ANZ-Roy Morgan New Zealand Consumer Confidence dipped 2 points to 118 in July, around its historical average. But winter weather typically takes a toll: seasonally adjusted confidence actually rose 1 point to 121.
October consumer confidence slipped 3 points to below-average levels.
- Perceptions of current conditions remain very strong, but the future conditions index is at its lowest level since late 2015.
- The pessimism about the future has spread from being about the broader economy to about one’s own future financial position. But households nonetheless still think it’s a good time to buy a major household item.
Consumer confidence is gradually declining due to increased wariness about what the future may bring, according to the ANZ-Roy Morgan Consumer Confidence Index. The overall index dipped 3 points, taking it under the historical average. The Current Conditions Index lifted 2 points to 122, but the Future Conditions Index fell 5 points to 111, the lowest level since September 2015.
- Consumers’ perceptions of their current financial situations dipped 1 point to a net 11% feeling financially better off than a year ago.
- A net 20% of consumers expect to be better off financially this time next year, down 7 points.
- Nonetheless, a net 33% say it’s a good time to buy a major household item, bouncing back 4 points from last month’s fall.
- Perceptions regarding the next year’s economic outlook fell 5 points to a net 1% expecting conditions to deteriorate. The five-year outlook fell 4 points to +14%.
- Confidence in the North Island ex Auckland and Wellington dropped the most, down 6 points to be the weakest in the country. Auckland was the only region to see an improvement, now sitting in the middle of the pack.
- House price inflation expectations dropped to 2.7% y/y, lower everywhere.
- Inflation expectations lifted a tad from 3.4% to 3.5%, a pretty muted move in light of recent petrol price increases.
Consumer confidence is a mixed bag currently. Consumers are feeling good about the here and now, but concerns about the future are clearly growing. And now, it includes concern about respondents’ own future financial situations, not just the broader economy. Indeed, consumers haven’t been this pessimistic about their own and their family’s financial outlook one year ahead since mid-2012, and this data series has only been below the current level of 20% once since 2008.
A key question is whether this growing concern about the outlook will lead to consumers reining in their spending. However, encouragingly for retailers, the proportion of respondents who think it’s a good time to buy a major household item increased and is at a level consistent with solid growth in spending.
The economy is facing a mix of headwinds and tailwinds at the moment. In our view they roughly cancel out in aggregate – we see the economy continuing to grow at a 2½-3% pace. But if households get spooked into a higher saving rate, this will dampen growth – a positive development from a medium-term standpoint, as it would build resilience to adverse events.
Indeed, our confidence composite gauge (which combines business expectations and intentions with overall consumer sentiment) suggests a slowing in GDP growth by year end (figure 2). Such a development would not be welcomed by the Reserve Bank, who is struggling to get inflation sustainably up to the inflation midpoint. We continue to see an eventual OCR cut as a very real possibility.
Click here to download the latest ANZ-Roy Morgan New Zealand Consumer Confidence Release PDF - September 2018.
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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.
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