NZ consumers gearing up to 'open the wallet' as confidence jumps: ANZ

Thursday 21st January 2010

New Zealand consumers are gearing up to start spending after a muted Christmas season as their expectations about the state of the economy jumped this month, according to the ANZ-Roy Morgan Consumer Confidence survey.

Confidence jumped 12.8 points to a three-year high 131.4 in January, after two monthly declines, with the measure of current conditions climbing above 100 for the first time in about a year, and the measure of future conditions advancing to a record high 146, since the survey’s inception in 2004.

“The combination of a recovery in housing and prospective peak in the unemployment rate in early 2010 is giving an aura of confidence,” the report by ANZ chief economist Cameron Bagrie and Roy Morgan’s Mark Dansey said. “Significantly, the current conditions measure has risen through 100 and portends of a preparedness to open the wallet.”

Retail sales data today showed spending rose 0.8% in November as the price of fuel increased, though Paymark, which accounts for about three-quarters of all electronic card transactions, showed sales only rose 2.6% last month from December 2008, when demand dried up in the midst of the global financial crisis.

Warehouse Group, the country’s largest listed retailer, reported flat sales through the holiday period, though jewellery store operator Michael Hill International Ltd. reported a recovery in New Zealand same-store sales last month.

The survey of 2,049 people, taken between Jan. 4 and Jan. 10, showed sentiment on current conditions is beginning to catch future expectations, and the report said these are a “more significant flag-bearer of future spending trends.”

A net 22% of respondents said now is a good time to buy major household items, compared to a net 11% last month.

A net 2% of respondents said they think they are worse off now than they were a year ago – the only indicator to remain pessimistic.

Respondents expect the inflation rate to average 3.8% over the next two years, down from 3.9% in December, but still ahead of the Reserve Bank’s target band of between 1% and 3%.

Still, inflation appears to be under control, with the Consumer Price Index shrinking 0.2% in the four months through December, giving central bank Governor Alan Bollard room to hold off lifting interest rates until the middle of the year, as he has previously indicated.

Businesswire.co.nz

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