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NZ consumer confidence falls for third month as households feel global bite

Thursday 10th November 2011

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New Zealand consumer confidence fell for a third month as household sentiment was clouded by instability in global financial markets, eroding optimism associated with the Rugby World Cup.

The ANZ-Roy Morgan Consumer Confidence fell to 109 in November from 112.2 last month, biting into the goodwill built up during the major sporting event.

The future conditions index fell 2.5 points to 114.6 and the current conditions index declined 4.2 points to 100.6, just above the neutral 100 level where the number of optimists and pessimists is equal.

“There does not appear to have been much of a feel-good factor coming through from the All Black’s victorious Rugby World Cup campaign,” said Khoon Goh, ANZ New Zealand head of market economics and strategy, in his report. “New Zealand consumers are certainly not getting carried away by the Rugby World Cup win.”

That’s bad news for retailers who have been patiently waiting for a pick-up in consumer demand for the past 18 months as households focus on repaying their debts and lifting their savings.

The biggest fall in sentiment came in households’ current financial position, which showed a net 18 percent of the 1,053 respondents surveyed think they are worse off now than a year ago, compared to a net 9 percent of pessimists in October.

“The level has been in negative territory for over three and a half years now, indicating that households don’t feel that they are getting ahead despite the economy officially being out of recession since the middle of 2009,” Goh said.

Still, respondents were still upbeat about the year to come, with a net 23 percent picking better times in November 2012, down from a net 29 percent in October.

A net 7 percent of respondents think New Zealand’s economy will deteriorate over the next year, up from a net 5 percent of pessimists in October, while a net 28 percent think there will be more good times than bad over the coming five years.

“The global situation and lack of strong local economic momentum is clearly starting to test the relative resilience seen in New Zealand to date,” Goh said. “With no more temporary feel-good factors to buoy consumers and with overseas headlines unlikely to show improvements any time soon, Christmas is shaping up to be somewhat of a Grinch.”

A net 19 percent of respondents think now is a good time to buy major household items, up from a net 19 percent a month ago.

Households are picking general inflation to average an annual 3.2 percent over the next two years, down from 3.4 percent in October.

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