Wednesday 24th September 2008
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Consumer confidence jumped 23 points to 104.8 in the September quarter, according to the Westpac McDermott Miller Consumer Confidence survey. The index rose from a 17 year low of 81.7 in the June quarter. A reading over 100 indicates optimists outnumber pessimists.
Pending tax cuts, lower fuel prices and steeper-than-expected interest rate cuts by the central bank "have all seen a collective sigh of relief from cash-constrained households," said Donna Purdue, Westpac senior economist. "After six very tough months, consumers are now starting to look forward with more optimism."
New Zealand's economy fell into recession this year and probably won't climb out until the final quarter, according to the Treasury department. A net 17% of consumers still expect worse times ahead, though that's an improvement from a net 52% expecting bad economic times in the previous quarter.
The Westpac survey is in step with the latest Roy Morgan poll, showing New Zealanders are less pessimistic about the economy after the central bank cut interest rates. Some 54% of those polled said they would be better off financially in the next 12 months, according to the poll in the two weeks ended Sept. 14.
Purdue said consumers shouldn't get over-excited about the survey results. "Consumers still have some major hurdles to overcome in the form of high mortgage rates, very high levels of debt and a rising cost of living," she said.
Westpac is forecasting the central bank will cut the Official Cash Rate by 50 basis points in October, and two further 26 basis point reductions in December and January, reducing the rate to 6.5%.
The survey of 1,559 people has a margin of error of about 2.5%.
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