Consumer confidence poll 'a red flag' for retailers, warns ANZ

Friday, 29 April 2022

Econ Talks - NZ economy stressed as we pay the inflated price for too much stimulus (14 April 2022)

Consumers remain extremely pessimistic about the economic outlook despite confidence picking up a little from a historic low last month, ANZ says.

The bank’s monthly survey showed 52% of those polled expected ‘bad times’ in the year ahead, with only 11% expecting ‘good times’ and the remainder a mix, which was only a slight improvement on last month.

The proportion of people who expected they and their own families would be better off in a year’s time outnumbered those thought they would be worse off by a net 4%, versus a net negative 9% last month.

But ANZ warned against taking much comfort from that, noting it was very unusual for confidence on that measure to be negative.

* Consumer confidence sinks to lowest level ANZ survey has recorded

The survey showed consumer confidence tracking similarly to the “languishing” confidence among businesses that ANZ separately reported on Thursday.

ANZ believes its consumer confidence poll is a good indciator that retailers can expect a downturn.

The findings suggest Finance Minister Grant Robertson will have his work cut out to lift the country’s economic spirits when he unveils the Budget on May 19, despite plans for billions of dollars in extra spending.

ANZ said its latest survey would have been affected by a mixed bag of developments, with Omicron infections passing their peak but the Reserve Bank hiking the official cash rate to 1.5% amid confirmation of higher inflation.

Despite inflation, ANZ said the survey showed that households still thought on balance that it was a very bad time to buy a major household item, which it said was the best indicator for retail spending.

“Covid volatility aside, current readings are a red flag for retailers,” ANZ said.

“The data sits well below the troughs of the 2008-09 recession. By age group, there’s a broad consensus that it’s time to close the wallet, but particularly amongst the mortgage belt.”

It was unsual for confidence to be so low during a period of record low unemployment, it said.

But very high inflation, particularly for necessities, meant the vast majority of people were seeing their real incomes sliding backwards, and those with debt were looking at sharply higher debt servicing costs, it noted.

“Those with savings are looking at deeper negative real returns on low-risk investments as inflation outpaces interest rate increases, not to mention wobbly global equities, losses on bond investments and falling house prices.

“No-one is immune.”

There was a real possibility of “a hard landing” for the economy, the bank said.