WELLINGTON: New Zealand consumer confidence slipped from a 19-month high this month while remaining relatively upbeat as people’s optimism about the strength of the economy shook off the impacts of last month’s Kaikoura earthquake. The ANZ-Roy Morgan consumer confidence index fell 2.7 points to 124.5, snapping three months of gains and, when combined with optimistic business sentiment, pointed to annual economic growth of more than 4%. The current conditions index fell 2.2 points to 125.1 while the future conditions index declined 3.1 points to 124.1.
“Pound for pound, there is a lot for consumers to be happy about,” ANZ Bank New Zealand chief economist Cameron Bagrie said in his report. “Wage growth might be subdued but with little inflation, purchasing power is still moving up.” The upbeat outlook for consumers will give retailers heart as they go into the all-important Christmas trading period, which many sellers rely on to deliver substantial sales.
The survey of 1005 people found a net 13% of respondents said they were better off now than a year ago, and a net 32% expect to be better off in 12 months’ time, both largely unchanged from November. A net 38% of respondents see now as a good time to buy a big-ticket item, down from a peak of 42% in November. Mr Bagrie said the Wellington and Canterbury regions didn’t appear to show any material response to the Kaikoura quake, which isolated the South Island town and closed down parts of the capital city’s central business district, with both in step with the rest of the country. The survey found a net 22% of respondents were optimistic about the economy over the coming 12 months, down from 23% in November, while a net 18% were upbeat about the next five years, compared to 28% a month earlier.
Bagrie said the 4% economic growth projected by the confidence gauges was probably optimistic given the difficulties of getting skilled labour will act as a capacity constraint. On inflation, respondents expect prices will rise an annual 3.4% over the next two years, compared to 3.3% in November, while house prices are seen rising at a 5.4% annual pace, compared to the 5% picked a month ago.
