New Zealand consumer confidence falls slightly in December

New Zealand consumer confidence index dropped in December. The ANZ-Roy Morgan Consumer Confidence Index eased to 121.8 from 123.7; however, it is still above the historical averages. But it is 8 points off the September high. The current conditions index dropped 1.3 points to 123.3, while the Future Conditions Index eased 2.2 points to 120.9.

Consumers continue to feel happy regarding their current financial situation. A net 14 percent feel financially better off than one year ago. This metric has been quite stable for the last 12 months. A net 28 percent of consumers expect to be better off financially this time next year. That is the lowest since August 2016.

Around 32 percent say it is a good time to purchase a major household item. Lately durables spending have weakened because of fewer house sales. Perceptions about the economic outlook dropped again. Net optimism came in at 13 percent, well off its September high of 30 percent. The five year outlook fell from a net 23 percent to 22 percent.

Sentiments dropped sharply in Auckland and Canterbury and are now the most pessimistic regions. Meanwhile, Wellington has recorded the highest sentiment, despite a drop of 2.9 points to 125.9. National house price expectations rose 1.5 percent to 2.4 percent; however remain at low levels. Inflation expectations continue to swing in a range of 3 percent to 4 percent.

Consumer sentiment is holding up noticeably in the face of a slower housing market and increased uncertainty. According to an ANZ research report, the solid labor market has much to do with it. But there is a hint of caution in the responses to the forward-looking questions. This is in line with the belief that the economy is seeing a slight lull as a number of growth drivers run out of puff around the same time and uncertainty weighs, stated ANZ.

“However, we believe the strong terms of trade and solid household income growth will carry the economy through. Barring a negative hit from offshore (which, to be fair, tends to be New Zealand’s fate once a decade or so), this business cycle has plenty of legs yet”, added ANZ.

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