Consumer sentiment has fallen to the lowest level since mid-2012. It’s not weak in level terms – the economy still has points on the board – but it’s certainly heading in a weaker direction. Consumers are growing more pessimistic about the economy’s prospects over the year ahead. Conversely, they still feel better off financially here and now, which is influential for immediate spending trends.
- Consumer sentiment has fallen to the lowest level since mid-2012. It’s not weak in level terms – the economy still has points on the board – but it’s certainly heading in a weaker direction.
- Consumers are growing more pessimistic about the economy’s prospects over the year ahead. Conversely, they still feel better off financially here and now, which is influential for immediate spending trends.
- While confidence doesn’t drive growth (incomes do), a lack of confidence can lead to an economy dropping the ball.
- House price expectations eased in Auckland but rose in adjacent regions.
ANZ-Roy Morgan New Zealand Consumer Confidence has been tackled. The ANZ-Roy Morgan Consumer Confidence Index fell a further 4 points in August from 113.9 to 109.8, the lowest level since mid-2012, and below its historical average. Sentiment has fallen 19 points this year. The fall is marked, though the level is not yet weak.
Sentiment ‘plays into the wind’ at this time of year. But our seasonally adjusted estimates also recorded falls
- Expectations regarding the economy one year ahead have been yellow-carded, falling from -2 to -16 – the lowest in over three years. That’s a worry. Sentiment regarding the economy’s performance five years ahead has also been penalised, falling from +11 to +8.
- Those believing it is a good time to buy a major household item fell (+27, down from +34). The impact of the weaker NZD is coming through.
- However, a net 7% believe they are financially better off compared to last year. A slightly better result than last month.
- The Current Conditions Index (a concurrent indicator of spending trends) fell from 119.0 to 117.2. That’s still healthy in level terms.
- The Future Conditions Index fell from 110.4 to 104.9, which is a 6½- year low. The penalty count is mounting!
- Consumer Confidence fell in all regions with the exception of Wellington.
. There is also a levelling-out effect as economic expansions mature. Survey questions ask if things are going to get better – it’s easier to improve when situations are poor, meaning it’s hard to sustain high levels of optimism. So we need to be cautious distinguishing weakening trends (the change) from still-respectable results (the level).
The team looks a player short, nonetheless
. There are growing economic challenges. The cash-flow strains in the dairy sector are now beginning to impact downstream industries and broader rural regions, and other regional issues (such as the peak in the earthquake rebuild) are also evident. Unemployment is rising and the NZD falling. The latter is great for exporters, but less so for consumers. The world economy (business news) is full of twists and turns.
The coach has called to the reserves bench and is beginning to ring the changes
. While the economy may be falling behind on the scoreboard at present, the conditions are in place (lower NZD and RBNZ OCR cuts) to see momentum begin to turn upwards. Mortgage interest rates are falling and house price increases are broadening. With ACC levies being cut and petrol prices falling again, consumers have been given a discretionary cash-flow boost. Importantly, households are not feeling nearly as downbeat about their own personal situations, which is critical for their actual spending decisions.
Click here to download the ANZ-Roy Morgan New Zealand Consumer Confidence Release PDF - August 2015.
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Related Research Reports
The latest Roy Morgan Consumer Confidence Monthly Report is available on the Roy Morgan Online Store. It provides demographic breakdowns for Age, Sex, State, Region (Capital Cities/ Country), Generations, Lifecycle, Socio-Economic Scale, Work Status, Occupation, Home Ownership, Voting Intention, Roy Morgan Value Segments and more.
You can also view our monitor of Quarterly New Zealand Unemployment & Under-employment Estimates.