NZ consumer confidence upbeat in July as Kiwis pick better times for themselves

Thursday 14th July 2016

New Zealand consumer confidence remained upbeat in July as Kiwis were more optimistic about their own fortunes than they were for the broader economy.

The ANZ-Roy Morgan consumer confidence index slipped to 118.2 last month from 118.9 in June, though a net 29 percent of respondents expect to be better off financially in a year's time, compared to 24 percent a month earlier. They were less optimistic about their 12-month outlook for the economy, with a net 4 percent expecting good times ahead, down from 9 percent in June, while over a five-year horizon a net 13 percent see more good times, compared to 16 percent.

The current conditions index slipped 0.2 of a point to 122.5 while the future conditions index decreased 0.9 of a point to 115.5.

"The mix to growth (more borrow and spend) is becoming increasingly lopsided but we’ll take it for now," ANZ Bank New Zealand chief economist Cameron Bagrie said in a note. "While we are seeing clear exuberance on some levels (housing, credit growth), reasonable (as opposed to exuberant) levels of consumer sentiment suggest a degree of caution nonetheless in terms of blowing all the loot."

Government figures this week showed retail spending on credit and debit cards rose 1.2 percent in June. Consumer spending has been underpinned by record net migration inflows and high numbers of tourists coming to New Zealand, which has helped make up for anemic economic growth on a per capita basis.

The survey of 1,000 people showed a net 36 percent of respondents think it's a good time to buy a major household item, unchanged from a month earlier, while inflation expectations eased to 3.3 percent annual pace from 3.8 percent in June.

Consumer price figures are set to be released next week and will likely show inflation rose 0.5 percent in the June quarter. Inflation has been tracking below the Reserve Bank's target band of 1 percent-to-3 percent since late 2014, though skills shortages are emerging in the building sector which could start driving up wages.

ANZ's Bagrie said the labour market is still improving and with more jobs being advertised and shortages appearing, wages should start moving up.

Respondents expect house prices to keep rising, with consumers predicting an annual increase of 6.1 percent over the next two years, up from 6 percent in June.

BusinessDesk.co.nz

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