Consumer confidence dims in February amid rising unemployment

Thursday 18th February 2010

New Zealand consumers are a bit more downbeat this month after data showed unemployment rose to a 17-year high at the end of last year, sapping the elevated optimism of last month.

Confidence fell 7.8 points to 123.6 in February, according to the ANZ Roy Morgan Consumer Confidence Survey from a three-year high in January.

The current conditions measure fell 10 points to 100 while future conditions index dropped 7 points to 139.

“Faced with a rising unemployment rate and rapidly softening housing market it is perhaps of little surprise to see confidence ease,” the report by ANZ chief economic Cameron Bagrie and Roy Morgan’s Mark Dansey said.

“The lack of conviction in regard to current conditions – it has now wobbled at or around 100 for six months – suggests consumers remain cautious in regard to spending.”

Retail sales over the past two months have been relatively flat, amid rising unemployment which hit 7.3% in the December quarter last year.

Still, economists are seeing some signs of a pick-up with sales expected the next few months as stores try to sell down their holiday inventories.

The survey of 1,047 people between February 1 and February 14 showed a net 15% of respondents see now as a good time to buy major household appliances, and fierce competition among appliance retailers in the fourth quarter of 2009 underpinned modest growth in the period.

A net 15% felt they were worse off than they were at the same time a year ago, up from 2% in January, and still the only indicator to remain pessimistic.

Respondents still expect inflation to average 3.8% over the coming two years, the same rate as last month.

Businesswire.co.nz

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