The Westpac-McDermott Miller Consumer Confidence Index edged down 0.3 ppts in September to a level of 90.9 – effectively unchanged from the June quarter and still a fair way below the historic average (1).

“The continued softness in consumer confidence is notable, as in the weeks leading up to our latest survey the RBNZ delivered another cut in the Official Cash Rate,” said Senior Economist Satish Ranchhod. “Reductions in the Official Cash Rate and the related falls in mortgage rates will help to boost many households’ disposable incomes over the coming year. However, it will take some time for those reductions to flow through to households’ back pockets.”

“For now, households are still seeing their spending power squeezed by continued increases in living costs. At the same time, the labour market has been softening, and house price growth remains subdued,” noted Mr Ranchhod. “Those concerns are dampening consumer confidence and are also weighing on spending appetites.”

“Confidence is low across all income groups, but it’s particularly soft among those on lower incomes,” commented Mr Ranchhod. “The past year has seen big increases in the cost of items like food and electricity. Such increases can be particularly tough for households on lower incomes, who tend to spend a larger share of their incomes on essentials.”

“Women remain much more pessimistic than men and their confidence has dropped again this quarter by 3 points, down to an index score of 83.4. In contrast, men have experienced a small rise in confidence of 3.1 points to 99.6. Looking ahead to next year, both men and women have similar expectations for their personal finances, with around a quarter expecting to be worse off. The message is different when looking at New Zealand’s economic outlook, with women taking a more pessimistic view than men: only one in 10 women expect good economic times over the next 12 months, compared with just over a quarter of men. Looking ahead five years from now, around two in five women expect good times, compared with over a third of men,” said Imogen Rendall, Market Research Director of McDermott Miller Limited.

“For those who are not in paid work, confidence has dropped by 5.2 points this quarter to 80.4. In contrast, for those in paid work there was a small rise in confidence of 3.3 points to 98.4. Just under two in five of those in paid work expect to be worse off financially in a year’s time, compared with almost a third of those who are not in paid work feeling this way,” noted Ms Rendall.

Acknowledgement

The Westpac McDermott Miller Consumer Confidence Index is owned by McDermott Miller Limited. Westpac McDermott Miller should be acknowledged as the source when citing the Consumer Confidence Survey and Index. Graphs supplied may be reproduced by the news media provided Westpac McDermott Miller is acknowledged as the source.

Note: 

(1) A level below 100 indicates that there are more households who are pessimistic about the economic outlook than those who are optimistic.)

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