Wednesday 4th April 2018
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New Zealand consumer confidence lifted slightly in March, continuing to recover from last year's weakness as house price growth expectations rose.
The ANZ Roy Morgan consumer confidence index rose to 128 in March from 127.7 in February. The current conditions index rose 0.4 points to 127.7 while the future conditions index gained 0.2 points to 128.2.
Of the survey's 1,002 respondents, a net 25 percent saw good economic times in the coming 12 months, up from 21 percent in February. The five-year outlook dropped four points, with a net 25 percent seeing good times ahead. A net 16 percent of respondents felt they and their families were better off financially than this time last year, from net 15 percent in February, and a net 35 percent expect to be better off financially a year from now, up from 34 percent.
"Consumer confidence remains high. And why not?" said Sharon Zollner, chief economist at ANZ Bank New Zealand. "Jobs are plentiful, there’s talk of higher wages, and the Auckland housing market has found a floor. Steadiness is the theme, with confidence unchanged versus last month, and no difference between current and expected future conditions."
A net 39 percent of those surveyed said it was a good time to buy a major household item, down from 40 percent in February, which ANZ said suggests robust durables spending.
Respondents expected house prices to rise 3.5 percent per year over the next two years, up from 3.1 percent the previous month, with Wellingtonians expecting house prices to rise 4.4 percent. Prices in general are expected to rise 3.4 percent per year over the next two years, from 3.4 percent in February.
"To be fair, high consumer confidence can be a mixed blessing at this stage of the economic cycle," Zollner said. "If it primarily reflects a frothy housing market, it can lead to more borrowing than is prudent, with a resulting boom-bust dynamic in consumption. Fortunately, at present the confidence appears to be founded on solid income growth."
"The strong labour market is supporting household incomes and various government policies are intended to provide a further boost, while at the same time strong commodity prices are boosting exporter incomes. With household debt already at a record high as a proportion of incomes, a steady-as-she-goes housing market is just the ticket."
This survey comes after last Wednesday's release of the second ANZ Business Outlook of 2018, which showed business confidence increased in March on some measures, but most remain below the levels of six months ago. The survey reported a net 20 percent of businesses were pessimistic about the year ahead, versus 19 percent in February.
Zollner said ANZ's confidence composite gauge, which combines business and consumer sentiment, "is being supported by robust consumer confidence in the face of hohum business confidence", and remains consistent with GDP growth between 2 percent and 3 percent.
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