NZ consumer confidence falls in third quarter as rising rates dim outlook
By Jonathan Underhill
Sept. 22 (BusinessDesk) - New Zealand consumer confidence fell in the third quarter amid signs rising interest rates and a slower pace of economic growth are dimming the outlook and kiwis' spending plans.
The Westpac McDermott Miller Consumer Confidence Index fell to 116.7 in the September quarter, from 121.2 three months earlier and from a nine-year high of 121.7 in the March survey. A reading above 100 indicates more optimists than pessimists.
The Reserve Bank has signalled a pause in its tightening cycle after lifting the official cash rate to 3.5 percent, but economists see further hikes to the OCR from early 2015, driving up borrowing costs. That may be reflected in consumers' attitudes toward their current and future finances and appetite to buy a major household item, which all weakened.
"Consumer sentiment shifted down a gear in the September quarter, on the back of less exuberant economic news, rising interest rates and, possibly, a bout of uncertainty ahead of the election," said Westpac chief economist Dominick Stephens. The drop in those deeming it a good time to buy a household item "may be an early sign of consumers becoming a touch more cautious with their spending."
The present conditions index fell to 113 from 116.8 three months earlier and the expected conditions index fell to 119.3 from 124.1. Consumers' attitude to their current financial situation weakened to -0.1 from 2.1 and for their expected financial situation, slipped to 10.2 from 11.5.
Those deeming it a good time to buy fell to 26.1 from 31.5. The one-year economic outlook tumbled to 18.3 from 30.8, while the five-year outlook recorded a more modest decline, to 29.3 from 30.1.