Consumer confidence dips, as outlook for economic weakens

Wednesday, 20 June 2018

A new consumer confidence survey shows Kiwi households are less optimistic than they were in March.

Consumer confidence has dipped in winter, with households becoming more downbeat about the outlook for the economy.

The latest Westpac-McDermott Miller consumer confidence index for June fell 2.6 points to 108.6. A reading above 100 means more people are optimistic than pessimistic, but the latest reading is below the survey's long run average.

'The fall in confidence in the June quarter was spread widely across regions, age groups and income levels,' Westpac chief economist Dominick Stephens said.

'However, the fall was not particularly large, and speaks to more of a general malaise among households rather than specific worries or events.'

Stephens said the fall was consistent with the general picture that the 'edge has come off the economy's upturn', with a cooler housing market dulling confidence and rising fuel prices eating into households' budgets.'

'With a range of new Government policies that are likely to dampen house price growth in the years to come, it will be important to watch how households' attitudes to spending and saving evolve.'

The number of households which see now as a good time to buy a major item increase, however Westpac said this could reflect an expectation that prices will soon start to increase, rather than a confident outlook.

Not all households were more downbeat, with an increase in the outlook for some on lower incomes, Richard Miller, managing director of McDermott Miller said.

'Consumers with household incomes of $30,000 to $50,000 are the notable exception [to the overall fall]. Their confidence rose 3.1 points to 109.0 on the consumer confidence index,' Miller said.

'It appears that the Coalition Government's emphasis on improving the financial conditions of households on lower incomes has given this segment of consumers, in particular, hope for the future.'

There was a relatively sharp fall in consumer views about the outlook for the economy and their personal financial situation, with the expected conditions index falling 4.6 points to 106.6, well below average.

On Thursday, Statistics NZ will release economic growth figures for the three months to March 31, which are expected to show the New Zealand economy expanded by around 0.5 per cent during the period.