Consumer confidence takes another knock

Thursday 21st October 2010

New Zealand consumer confidence took a knock this month as kiwis put off buying major appliances amid a tight labour market and a lift to consumption tax. But optimism about the future is improving.

The ANZ-Roy Morgan Consumer Confidence survey dropped 2.8 points to 113.6 in October as more people think it's a bad time to buy major appliances and are more pessimistic about the current economic environment.

"It is hard to gauge how much of this fall reflected the rise in GST at the start of the month, but clearly such a large fall suggests the GST rise has been influential," ANZ chief economist Cameron Bagrie said in his report.

"The decline in current conditions does not bode well for immediate appetites to spend."

New Zealand's economic recovery lost its stride this year as households stopped spending and focused on paying back debt amid high unemployment and a dreary property market.

That prompted the Reserve Bank to pause tightening monetary policy last month and keep the official cash rate at what Governor Alan Bollard calls a "very very stimulatory" level.

The current conditions index sank 11 points to a 14-month low of 92.3, while the future expectations component rose 2 points to 127.9.

A net 9% of 1,071 people interviewed said they were worse off financially than a year ago, an improvement on the net 12% in September, while a net 31% expect to be better off in 12 months time, up from 28%.

A net 10% of respondents predict New Zealand will be better off in September 2011, up from 5%, and a net 44% are picking better times in five years.

A net 7% of people think now is a bad time to buy a major household item, compared to a net 18% thinking it was a good time to buy last month.

Businesswire.co.nz

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