Consumer confidence rebounds in September

Monday 15th September 2008

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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