Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


NZ consumer confidence slips in 2Q on weak dairy, rate hikes

NZ consumer confidence slips in 2Q on lower dairy prices, higher interest rates

By Tina Morrison

June 16 (BusinessDesk) - New Zealand consumer confidence fell in the second quarter as lower dairy prices and higher interest rates weighed on sentiment.

The Westpac McDermott Miller Consumer Confidence Index slid to 121.2 in the June quarter, from a nine-year high of 121.7 in the March survey. A reading above 100 indicates more optimists than pessimists.

The drop in confidence was most noticeable in smaller urban centres and rural areas, which would have been most affected by a drop in global dairy prices. A net 31 percent of those polled expect good times ahead for the economy over the year ahead, down from a net 35 percent in the March quarter and the first decline since the September 2013 quarter. Optimism about the next five years slipped below the historical average to a net 30.1 percent from 31.8 percent in the March quarter.

"Consumer confidence remains extremely high," Westpac Banking Corp senior economist Felix Delbruck said in a note. "Given the recent drop in dairy prices and the fact that the Reserve Bank has started raising interest rates, it's perhaps surprising that confidence hasn't fallen more."

The survey was taken June 1-10, before the Reserve Bank raised the benchmark interest rate by 25 basis points to 3.25 percent on June 12, the third increase this year. There was little sign in the survey that rising interest rates were prompting a greater desire to save or pay down debt, with the number of people saying they would invest a windfall in savings or use it for debt repayment at a 15-year low.

The net balance of households saying it is a good time to buy a major household item rose for a third consecutive quarter to 31.5 percent from 28.3 percent and when asked what they would do with a cash windfall, more people said they would use it to go on a holiday, suggesting bargain-hunting by consumers lured by the continued drawcard of cheap imported goods and overseas trips.

"Today's survey gives little sense that rising interest rates have dampened spending appetites," Delbruck said. "Consumers' attitudes towards their own finances are little changed since early March and they seem to have become less focused on saving and paying down debt.

"This may reflect the fact that borrowers have recently had the opportunity to fix their mortgages at favourable rates," he said. "The Reserve Bank will be taking note and feeling validated in its decision to signal more rate hikes to come."

New Zealand's central bank is expected to deliver another two rate rises this year, according to a Reuters poll of economists taken after last week's rate increase. Nine of 13 economists expect the next rise to come in July.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Trade Plans: Prime Minister's Speech To International Business Forum

"The work to improve public services, build infrastructure, and solve social problems is possible only because we have enjoyed sustained, solid economic growth. A big reason for that is the Government’s consistent agenda of economic reform, and our determination to open up more opportunities for trade with the world." More>>

ALSO:

Media: TVNZ Flags Job Cuts To Arrest Profit Decline

Chief executive Kevin Kenrick said the changes were aimed at creating "a sustainable future video content business for TVNZ in an ever-changing media market." More>>

ALSO:

Reserve Bank: Wheeler Keeps OCR At 1.75%

Reserve Bank governor Graeme Wheeler kept the official cash rate unchanged at 1.75 percent, as expected, and reiterated his view that the benchmark rate doesn't need shifting for the foreseeable future. More>>

ALSO:

Retail: Pumpkin Patch Brand, IP Sold To Catch Group

The receivers of failed children's clothing retailer Pumpkin Patch have confirmed that the company's brand and intellectual property have been sold to Australian online retailer Catch Group. More>>

ALSO:

Oil: 2017 Block Offer Petroleum Tender Launched

New Zealand is well-placed to take advantage of the economic benefits of oil and gas exploration, Energy and Resources Minister Judith Collins announced today at the launch of the 2017 Block Offer petroleum tender. More>>

ALSO:

OECD And Zero Carbon Reports: Environmental Pressures Rising In New Zealand

New Zealanders enjoy a high environmental quality of life and access to pristine wilderness. However, New Zealand’s growth model, based largely on exploiting natural resources, is starting to show its environmental limits with increasing greenhouse gas emissions and water pollution ... More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news