ANZ-Roy Morgan New Zealand Consumer Confidence - Late Tackle
• Consumer sentiment continues to retreat, though from highs.
• Consumers are less upbeat about the economy over the year ahead. They are not downbeat, simply more cautious.
• House price expectations remain elevated, with little sign of a shift in sentiment following recently announced targeted measures.
ANZ-Roy Morgan New Zealand Consumer Confidence is playing increasingly defensively – albeit with a solid lead on the board.
The ANZ-Roy Morgan Consumer Confidence Index eased 4 points from 123.9 to 119.9. Looking at the score card we note that confidence remains above average (117.9), but there is no doubting the scoring rate has slowed.
Key results included:
• A net 7% believe they are financially better off compared to last year. That’s a draw with last month.
• It’s still perceived as a good time to buy a major household item though it’s at a less exuberant level (+38, down from +42).
• One-year-ahead expectations regarding the economy took a sliding tackle, falling from +21 to +11 – that’s the lowest level in over two years. Sentiment regarding the economy five years ahead likewise got a yellow card (falling from +25 to +17).
• The Current Conditions Index (a concurrent indicator of spending trends) slipped from 124.6 to 122.6; still the top-scorer.
• The Future Conditions Index eased from 123.4 to 118.1.
• Canterbury showed the largest fall in consumer sentiment; the kick from the rebuild is fading and substitutes are needed.
• The remainder of the South Island showed a large fall in future conditions; this sub-index is now locked in its own half at less than 100.
It’s natural to be a little glum heading into winter but the muddy conditions do not explain the falls in our consumer confidence indexes. Our seasonally adjusted estimates show similar falls to the headline data.
It’s been a game of two halves for consumers and sentiment reflects that. General inflation is low, so purchasing power is high. But petrol prices have moved up; that’s immediately noticeable in the pocket. Job growth remains brisk, but so too does competition for roles; the past year has seen 73,000 people enter the labour market, which has broadly matched the creation of new jobs (74,000). Net on net that’s still a massive positive for the economy. The Auckland housing market remains strong and interest rates have moved lower. However, economic headwinds are becoming more pronounced – there is a reason interest rates are on the slide. Dairy prices are low and the new reality appears to be settling in across some regions. Stimulus from the Canterbury rebuild is coming to a peak; it hasn’t stopped and will be ongoing for years, but Christchurch needs to be looking for alternate and broader drivers of growth.