Consumer confidence down in July

NZPA

Thursday 14th July 2011

Consumer confidence has fallen slightly according to a survey, but there still more optimists than pessimists, even though confidence levels remain below historical averages.

The big June 13 aftershocks that hit Christchurch may have hurt confidence levels but fewer people are feeling worse off financially, compared to last year, according to the ANZ-Roy Morgan Consumer Confidence survey.

The study's index of confidence fell 3.1 points to 109.4 in July, partly reversing the 9.2 point increase seen last month.

The ANZ said that there did not appear to be any seasonal factor behind the fall, as seasonally-adjusted estimates also showed a roughly similar decline.

The only one of five key questions -- repeated in the monthly surveys -- which showed an improvement was on whether people were better off financially compared to a year ago.

The largest drop showed up in expectations for the general economy over the next five years, which fell from plus-38 to plus-31.

A future conditions index fell from 121.2 to 115.6, while the current conditions index was up marginally from 99.6 to 100.1.

The bank's analysts said the fall in confidence over July was within the usual monthly variability: "We are not too perturbed by it".

The survey period was conducted after the large June 13 aftershocks and the June 23 announcement of the Government’s package to buy out homeowners in the worst-affected areas of Christchurch.

Confidence was lower immediately following the June 13 aftershocks, but picked up a little after the Government’s package was announced, and this effect was more pronounced in the South Island.

But the bank noted some of the effects on confidence levels over the month could have been due to global ructions due to the ongoing Greek debt crisis.

"Consumers’ sense of cautiousness is likely to remain for a while," the bank said.

There had been a recent lift in retail spending of late, but there was no big increase in the numbers of consumers who thought it was a good time to buy a major household item, so there was unlikely to be a further material pick-up in spending in the next couple of months.

The loss of confidence was mostly seen among women -- where the level of sentiment dropped 6 points to 100.9, while confidence across males was unchanged at 118.3 points.

Confidence was weaker across all age groups except 18-24 year-olds, and the largest drop of 8 points was measured by the 35-49 year-old age group, while confidence for those aged between 18 and 24 years lifted 9 points to 127.5.

Regional confidence was mixed. Wellington posted a small rise in sentiment, Canterbury was unchanged and the rest of the nation was weaker.

Consumer expectation of inflation two years out increased from 3.2 percent to 3.9 percent, and expectations of house price increases two years out rose from 2.3 percent to 2.6 percent, indicating that consumers continued to expect real house prices to decline.

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