Consumers hummed a happier tune in October, with sentiment rising 4 points to 114.9 – the second straight gain and the highest level in four months. Consumers’ expectations towards the economy’s future prospects continue to improve, and how they feel about their current situation has stabilised; the latter is particularly important.
- Consumers hummed a happier tune in October, with sentiment rising 4 points to 114.9 – the second straight gain and the highest level in four months.
- Consumers’ expectations towards the economy’s future prospects continue to improve, and how they feel about their current situation has stabilised; the latter is particularly important.
- House price expectations eased across all regions with the exception of Wellington, where they are now also the strongest.
ANZ-Roy Morgan New Zealand Consumer Confidence changed key in October. The ANZ-Roy Morgan Consumer Confidence Index lifted a further 4 points, rising from 110.8 to 114.9. This builds on September’s 1 point gain and takes the level of sentiment to the highest in four months.
A few months back the economy was missing notes and losing fans.
- Expectations regarding the economy one year ahead hit the right notes, rising from -12 to +2. This is still below historical averages, but is now well up from the three-year low hit in August. Sentiment regarding the economy’s performance five years ahead rose to +18 – the highest since May.
- Those believing it is a good time to buy a major household item rose to +31 from +24.
- However, things aren’t fully in tune just yet. Those feeling they are financial better off compared to last year hit a two-year low, falling 6 points to zero. Expectations for next year were broadly unchanged (+25).
- The Current Conditions Index was broadly unchanged, at 115.4 – an important stabilisation after falling over the prior five months.
- The Future Conditions Index lifted from 108.1 to 114.6.
- Confidence rose in all regions (in seasonally adjusted terms), and is now the strongest in Canterbury, just ahead of Auckland.
Sentiment had fallen sharply and was threatening to continue doing so, intensifying the economy’s downwardly skewed risk profile. This latest bounce in confidence is therefore encouraging, and it is not due to seasonal elements alone (confidence has also risen in seasonally adjusted terms). The stabilisation in current conditions is important, as it is how consumers are feeling here and now that has ultimately been shown to affect spending decisions.
So what’s behind this latest move?
We’ve seen mortgage interest rates continue to fall and regional housing markets benefit as Auckland’s strength spills over (although nationwide house price expectations did dip in the month). More optimism on the dairy outlook is also likely to have helped, with the largest gains in confidence appearing in the more dairy-aligned regions. And hey, the Rugby World Cup is on and the All Blacks are still well in the mix!
That said, it is not exactly a hit single just yet.
While rising, sentiment remains below historical averages, and there are still plenty of factors to keep consumers cautious. The unemployment rate is rising again, dairy incomes are still tight and the global backdrop is concerning. But we’ll take the stabilisation gratefully, nonetheless. Rising confidence doesn’t mitigate economic risks, but it does give the economy more resilience to better manage and navigate them.
Click here to download the ANZ-Roy Morgan New Zealand Consumer Confidence Release PDF - October 2015.
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