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Consumer confidence rebounds in September

Monday 15th September 2008

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New Zealand consumer confidence rebounded in September, suggesting the prospects of lower interest rates and cheaper fuel are lifting optimism in the nation's households.

A net 23% of consumers are optimistic about the economy, according to the One News Colmar Brunton survey. That's up from a net 6% in August and a recovery from the negative 27% result in July.

The confidence survey comes after government figures on Friday showed New Zealand retail sales fell a more-than-expected 0.8% in July, adding to evidence consumer demand had weakened as the economy shrinks. Since then, the central bank has cut interest rates for a second time - a greater-than-expected 50 basis point cut to 7.5% last week, with the prospect of more decreases to come.

"Historically, confidence has been a very good predictor of the economic cycle," said Shamubeel Eaqub, economist at Goldman Sachs JBWere. Still, the survey may not herald a sustained recovery and may be "an interlude in a broader theme of protracted economic weakness," he said.

By Jonathan Underhill

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