Friday 30th August 2019
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New Zealand consumer confidence improved in August as households were more upbeat about the state of their own finances despite being somewhat uneasy about the outlook for the wider economy.
The ANZ-Roy Morgan consumer confidence index increased 1.8 points to 118.2 points last month, with the current conditions up 1.4 points to 127.2 and the future conditions gauge up 2 points at 112.2. ANZ New Zealand chief economist Sharon Zollner said the index was still slightly below the long-term average, but showed households are feeling relatively robust at the moment.
That's in stark contrast to businesses, with the ANZ Business Outlook survey yesterday showing firms are now expecting their own activity to get worse in the coming year with the first negative reading in more than a decade.
"A key downside risk over the year ahead is that employment indicators have deteriorated: employment intentions out of key business surveys and job ads. While the labour market is undeniably tight at the moment, that appears set to change," Zollner said.
"For now, however, the proportion of people who think it’s a good time to buy a major household item remains high, which is good news for retailers."
Of the 1,001 respondents to the consumer confidence survey, a net 16 percent said they are better off now than they were a year ago, up from 12 percent in July, and a net 27 percent expect to be doing better in a year's time, up from 21 percent.
And a net 39 percent still see now as a good time to buy big-ticket items, unchanged from July. Respondents predict prices will rise an annual 3.2 percent over the next two years, up from 3.1 percent in July. House price expectations increased to 2.8 percent annual growth from 2.5 percent.
They don't share that optimism about the economy. A net 1 percent expect the economy to deteriorate over the coming 12 months, although a net 11 percent see good times on the horizon over the next five years. Both responses were unchanged from July.
Zollner said the composite gauge of the business and consumer surveys is in line with her expectations that slowing growth is finding a floor.
"We expect that the 50 basis point OCR cut delivered in August will filter through to consumers in time which should lift confidence, as long as the labour market holds up," she said.
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