Sharechat Logo

NZ consumers still reasonably upbeat and willing to make big ticket purchase

Friday 1st February 2019

Text too small?

New Zealand consumers remained reasonably upbeat as they kicked off 2019, with more people feeling optimistic about their current finances and still willing to make big-ticket purchases. 

The ANZ-Roy Morgan consumer confidence index dipped 0.2 of a point to 121.7 in January, marginally above its historical average. People were more optimistic about their current situation than what the future may bring, with the current conditions index up 0.6 of a point to 124.2, while the future conditions index decreased 0.7 of a point to 120.1. 

"Consumers are feeling pretty good about things, with some concerns about the overall economic outlook, but slightly above-average confidence regarding their own situations," ANZ Bank New Zealand chief economist Sharon Zollner said.

Of the 1,000 people surveyed, a net 12 percent said they were financially better off now than a year ago, an improvement on the net 11 percent in December. However, their expectations for their own finances in a year's time slipped to a net 29 percent saying they expect to be doing better, down from a net 30 percent. 

Unlike business confidence surveys, consumer sentiment has remained relatively robust since the formation of the Labour-led coalition government in late 2017, with robust jobs growth and targeted support packages for low-income families. An employee confidence survey earlier this month showed people were confident in the labour market, although they're still waiting for higher wages. 

A net 36 percent of respondents see now as a good time to buy a major household item, unchanged from December. Zollner said that appetite was consistent with spending, although slowing population growth would rein in the retail sector, she said. 

Retailers have noted relatively subdued spending through the Christmas and New Year period, while Air New Zealand this week said the domestic travel market was slowing down when the national carrier downgraded its annual earnings. 

Reserve Bank data this month showed domestic credit card billings fell a seasonally adjusted 0.7 percent to $3.82 billion in December, and that balances outstanding at the end of the month shrank 0.5 percent to $7.68 billion, the first monthly decline since March 2017. Despite that deleveraging, 32.3 percent of total credit limits was outstanding at the end of the month, the highest proportion since the Reserve Bank started collecting that data more than a decade ago. 

The ANZ-Roy Morgan survey today showed people are less optimistic about the economy's immediate fortunes. A net 12 percent expect better economic conditions in the next 12 months, down from 14 percent in December. They're more upbeat for the longer-term, with a net 20 percent predicting a rosier economy over the next five years, up from a net 18 percent. 

Zollner said the consumer and business confidence surveys indicate the marked slowdown in the economy has found a floor. 

"We see growth of around 2½ percent for the next couple of years, with consumption supported by the strong labour market, but capped by weaker population growth, high household debt and a flat-to-weaker Auckland housing market." 

Inflation expectations were pared back, with respondents predicting annual consumer price inflation of 3.5 percent for the next two years, down from 4.2 percent in December, and house price inflation of 2.7 percent over the same period, down from 2.9 percent. 

(BusinessDesk)

  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

Spark using 'free' rugby offer to lock out competitors, says 2Degrees
NZ dollar rises against the Aussie after RBA indicates further rate cuts
Gold Report 18th June 2019
Electricity Authority urged to test privacy status of meter data
Shorn Fonterra likely to keep ingredients business - Jarden
Fully automated milking several decades away - Dairy NZ
NZ consumer confidence still downbeat in June quarter
NZ dollar largely steady; focus on FOMC
18th June 2019 Morning Report
Farm debt mediation will ensure fair process - O'Connor

IRG See IRG research reports