NZ consumer confidence dips in February, largely stable in global headwinds

Thursday 18th February 2016

New Zealand consumer confidence slipped to its historical average in February, according to the latest ANZ-Roy Morgan Consumer Confidence Index.

The index declined 2 points to 119.7 in February, in line with the historical average of 119. Future expectations fell 2 points to 116.7 while current expectations decreased by the same amount to 124.3, its second highest level since June last year, "a country mile from a rudderless outcome," ANZ New Zealand's chief economist Cameron Bagrie said.

“Stability in sentiment is tremendously encouraging given darkening global clouds - it’s another sign of economic resilience,” Bagrie said. “It’s been a rough start to the year for the global economy. New Zealand is not immune. Falling export prices, a stubborn New Zealand dollar and rising local funding costs have delivered meaningful tightening in local financial conditions. If sustained, it portends of more modest growth ahead."

Expectations for the economy over the year ahead rose 2 percentage points to a net 8 percent of respondents believing there would be good economic times, in line with its historical average, while expectations further out to five years ahead dropped 2 percentage points to a net 15 percent optimistic, below the historical average.

A net 9 percent of respondents said they feel financially better off than a year ago, up 1 percentage point, while positive expectations 12 months ahead fell to a net 27 percent, from 32 percent last month.

Slightly fewer consumers thought it was a good time to buy a major household item, with the reading dropping to a net 40 percent from January's 44 percent, though still at the second highest level since June. Inflation expectations rose slightly to 3.4 percent, from 3 percent in January.

“Our confidence composite continues to point to respectable prospects for the economy heading into 2016," Bagrie said. "There are risks to monitor and choppy global seas to navigate. Consumers appear happier in calmer local waters.”

Canterbury remained the most upbeat region, while Auckland and Wellington's confidence improved, with the capital now at a six-month high. This offset growing gloom in the regional North and South Island, which might be driven by renewed dairy woes, Bagrie said.

House price expectations fell to 1.5 percent in Canterbury, the lowest on record, keeping the nationwide expectations unchanged at 4.1 percent despite increases for most regions.

BusinessDesk.co.nz

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