ANZ-Roy Morgan New Zealand Consumer Confidence up 3.9pts to 127.8

SUMMARY

• Consumer sentiment lifted in June, the second consecutive increase.
  
  
• An uplift in confidence points to more spending-based activity.
  
  
• While housing market momentum is slowing, there is still plenty for consumers to smile about: jobs, a high NZD that’s keeping prices down, and the Government’s $2 billion family package injection, to name just a few.
  
  
• House price expectations cooled.

Consumer sentiment is full of pride, with confidence lifting in June. This is the second consecutive increase. The ANZ-Roy Morgan Consumer Confidence Index lifted from 123.9 to 127.8, the highest reading since January. The long-run average is 119. In fact, June marks the 10th month sentiment has sat north of that average.

The Current Conditions Index lifted 1 point while the Future Conditions Index had the lion’s share of the increase, rising 6 points.

• Consumers’ view of their own financial position waned a tad from +16 to +14. The level is highly respectable and no reason to growl. When people feel wealthier they are inclined to spend; we are there.
  
  
• A net 45% believe it’s a good time to buy a major household item. Still smiling like a Cheshire cat.
  
  
• Forward-looking indicators increased and are looking more majestic. Net optimism towards the economy one year out went from +17 to +25, and when assessing the five-year outlook, optimism lifted from +15 to +23. Respondents’ views regarding their own financial situation in 12 months’ time were little changed at +33 (+32 previously).
  
  
• Seasonally adjusted estimates showed a 3 point lift in headline confidence, no change in current conditions, and a 4 point increase in future conditions.

It’s tempting to put the uplift down to the ‘Simba’ (Lion’s tour) effect, but we’re not buying into that. There are still plenty of reasons for consumers to be purring:

• The labour market is on fire. The unemployment rate is falling and the number of job ads (vacancies) is rising. It’s just a question of time before wage growth starts to accelerate.
  
  
• Auckland’s house price growth has turned from tiger to tabby but the rest of New Zealand is doing fine. House prices are still rising looking at annual figures; prices in Auckland are up 2% and outside of Auckland they have lifted 11%, according to the REINZ’s house price index. But that masks a clear turn. Auckland house prices have fallen slightly in the past six months. Auckland households are shrugging it off, with consumer confidence actually lifting in the region over the month.
  
  
• The Government announced a $2 billion family incomes package in the 2017 Budget. That’s a massive injection into consumer wallets and the economy overall.

Our confidence composite gauge (which combines business and consumer sentiment, and so covers both the production and spending sides of the economy) continues to flag roaring economic momentum. Consumer confidence and firms’ own activity expectations are north of average, meaning prospects are the same for GDP growth.

Click here to download the latest ANZ-Roy Morgan New Zealand Consumer Confidence Release PDF - June 2017.