Sharechat Logo

Consumer confidence slips, weighed by economic growth worries

Tuesday 19th March 2019

Text too small?

Consumer confidence reversed last quarter's rise as the economy shows signs of slowing, the latest Westpac McDermott Miller survey shows.

The consumer confidence index fell 5.3 points to 103.8, below the long-run average of 111.2. It had risen 5.6 points to 109.1 in the December quarter. 

In today's survey, the present conditions index was down 3.9 points at 107.6 while the expected conditions index fell 6.2 points to 101.3. A reading above 100 indicates optimists outnumber pessimists.

"The low level of consumer confidence is consistent with the cooling in per-capita GDP growth over the past year. It also follows a wave of negative headlines about the strength of the global economy over the summer," said Westpac Bank senior economist Satish Ranchhod.

According to Richard Miller, Mcdermott Miller managing director, the fall in confidence is widespread, led by sharp falls in the Auckland region.

"The main reason given by respondents for feeling less confident is ‘costs rising faster than family incomes’ and, for Aucklanders in particular, ‘shortage of affordable housing,'" he said. 

A net 8.3 percent of the 1,556 people surveyed said they felt financially worse off now than they did a year ago, versus a net 4.2 percent in the prior quarter. A net 6.5 percent said they expect to be worse off in a year's time versus a net 0.5 percent who had expected an improvement in the prior survey. 

Households have become increasingly concerned about their personal financial situation, said Ranchhod.

"The number of households reporting that they are better off financially now compared to a year ago has been dropping steadily since mid-2017. Similarly, the number of households who expect to be better off this time next year has fallen to its lowest level since 2008, when the initial impacts of the Global Financial Crisis were just starting to be felt," he said. 

Households are also more negative about the wider economy. A net 5.1 percent anticipate a worse outlook over the coming year compared with a net 4 percent expecting an improvement in the prior quarter. A net 15.4 percent are optimistic about the five-year horizon versus 18.1 percent in the prior quarter. 

Those surveyed were slightly less willing to make 'big ticket' purchases, with a net 23.4 percent of people saying now is a good time to buy, compared to 27.3 percent in the prior quarter. 

Ranchhod said spending appetites have been largely resilient, which likely reflects the low level of interest rates. When asked what they would do with a $10,000 windfall, the proportion of households who said they would use it to pay down debt has fallen to its lowest level in 20 years. "This suggests that the drop in confidence may not fully translate to weaker consumer spending," he said. 

(BusinessDesk)

  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

NZ dollar weakens on global tensions, weak local manufacturing
General Capital (GEN:NZ) releases strong preliminary result
Burger Fuel turns to profit as it changes direction
Contact secures winter gas from OMV
Arrow International liquidators find $40M of notional assets
Forestry encroachment an issue for councils - Sage
NZSA concerned Kiwi Property paying too much in dividends
NZ food prices rise an annual 1.7% in May, rental inflation steady
Provincial centres lead the way in UFB uptake
Manufacturing grows at slowest pace in more than six years

IRG See IRG research reports