ANZ-Roy Morgan New Zealand Consumer Confidence dipped slightly off a three-year high in October. Neither the softer housing market nor election uncertainty have so far dented consumer optimism, which points to an ongoing decent pace of spending and activity growth.
SUMMARY
- ANZ-Roy Morgan New Zealand Consumer Confidence dipped slightly off a three-year high in October.
- Neither the softer housing market nor election uncertainty have so far dented consumer optimism, which points to an ongoing decent pace of spending and activity growth.
New Zealand consumers appear to be a resilient lot. The ANZ-Roy Morgan Consumer Confidence Index eased by 4 points from 129.9 to 126.3 in October, a historically high level. Adjusted for seasonality, the index also fell by 4 points to 129.1. This is still the third highest level in the past three years.
The Current Conditions Index dipped 3.3 points to 124.0, while the Future Conditions Index eased 3.8 points to 127.8. In seasonally adjusted terms the fall in the Future Conditions Index was somewhat larger, while that for Current Conditions was a little smaller.
- Consumers feel wealthier. A net 15% feel financially better off than a year ago. This is down from September’s 19%, which was a 10-year high. It also compares with the 10-year average that’s actually slightly negative. Views regarding consumers’ own financial situation in 12 months’ time eased slightly to +34 (from +36), also above the historical average.
- A robust net 34% believe it’s a good time to buy a major household item. History would suggest the weaker housing market will dent big-ticket spending. This is playing out in electronic cards durables spending data, but there is little sign of it in surveyed intentions.
- Perceptions on the economic outlook dipped. Net optimism towards the economy one year out fell back from +30 to +25, and for the five-year outlook, from +29 to +25.
- Confidence fell in Auckland (-8 points, now the least optimistic region), regional North Island (-3 points), Canterbury and the rest of the South Island (both down 2 points, but still the most optimistic areas of the country), but rose in Wellington (+3 points).
History suggests consumers should be feeling a little spooked. A sharply weaker housing market typically sees consumers’ appetite to spend drop in tandem. Together with the uncertainty over government policy, one might think that consumers would be in a slightly grave mood.
However, that does not appear to be the case. Sentiment is elevated, and increasingly diverging from hard spending data, which has been fairly ho-hum in recent months. While weaker housing is tricky, there are treats too: the labour market and household income growth are strong, and political horse-trading seems unlikely to result in fewer fiscal lollies.
The question is whether consumers are putting their money where their mouth is. If so, the economy can continue to record a decent pace of activity growth. But consumers are carrying a lot of debt, and there has historically been a tight correlation between the housing market and broader consumer spending. We suspect the ‘truth’ for consumption may lie somewhere in between very high surveyed confidence, and weak electronic card spending data (which does not cover the full gamut of consumption).
Our confidence composite gauge (which combines business and consumer sentiment, and so covers both the production and spending sides of the economy)
continues to indicate strong economic momentum. While the economy is unlikely to achieve the 4%+ rates of GDP growth this gauge is signalling, it is certainly suggesting fear is no handbrake on the economy at present.
Click here to download the latest ANZ-Roy Morgan New Zealand Consumer Confidence Release PDF - October 2017.
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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.