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Upbeat NZ consumers grow warier about the long-term economy

Friday 1st March 2019

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New Zealand consumers have remained relatively upbeat about the state of their finances, but are growing warier about the wider economy.

The ANZ Roy Morgan consumer confidence index decreased 0.9 of a point to 120.8 in February, holding near its long-term average. While the current conditions index increased 2 points to 126.2, the future conditions index was down 2.8 points at 117.3. 

The survey showed more consumers are feeling comfortable with their own budgets than they did a year ago, with a net 14 percent of the 1,001 respondents, saying they are better off financially now, compared to 12 percent in January. However, that optimism about where they'll be in a year's time has eased to a net 27 percent picking healthier finances, compared to 29 percent in January. 

"Consumers are feeling relatively serene. There is perhaps a touch of wariness regarding the overall economic outlook, but slightly above-average confidence regarding their personal situations," ANZ Bank New Zealand senior economist Liz Kendall said in a note. 

Unlike business confidence surveys, consumer sentiment has remained relatively upbeat since the formation of the Labour-led coalition in late 2017, with the labour market remaining strong and targeted assistance through transfers such as Working For Families and the winter energy payment bolstering household finances. 

ANZ's sister survey of business confidence yesterday showed firms were gloomier in February, belying expectations that they were coming out of their funk, with fewer companies expecting their own activity to improve and a growing number feeling the strain of tightening margins. 

Kendall said a composite measure of the two surveys suggests economic growth has slowed, and will average about 2.5 percent over the next couple of years. 

Today's survey showed a net 9 percent expect the economy to experience good times over the coming year, down from 12 percent in January, while 15 percent are optimistic on a five-year horizon, down from 20 percent a month earlier. 

A net 39 percent of respondents thought now was a good time to buy a big ticket item, up from 36 percent in January. 

Government data this week showed retail spending through the December quarter was much stronger than economists were predicting, with big gains in pharmaceuticals, duty-free goods, and food services. 


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