NZ consumer confidence jumps to 4-year high as kiwis see better times ahead

Thursday 24th September 2009

New Zealand consumer confidence surged to a four-year high as rising house prices and a labour market that’s been more resilient than feared help stoke optimism for better times head.

The Westpac: McDermott Miller Consumer Confidence Index climbed 14.3 points to 120.3 in the third quarter from three months earlier. A reading above 100 indicates optimists outnumber pessimists. A net 17% of consumers now expect good economic times over the coming year, a 46-point turnaround from the June quarter, when a net 29% saw worse times ahead.

“Consumers, regardless of age, income group, gender or region are convinced that better times lie ahead,” said Donna Purdue, senior economist at Westpac. “A more upbeat global economic outlook and increasing talk that the NZ recession had ended will no doubt have fed these improved expectations.”

The survey comes just a day after government figures showed the economy emerged from recession in the second quarter, eking out a 0.1% expansion after shrinking for the previous five quarters. The GDP data was part of a trifecta of upbeat news this week, with Fonterra Cooperative Group raising its milk payment forecast and figures showing the current account deficit is abating.

Today’s survey showed consumers expect to be better off financially in a year’s time. A net 24% of consumers say they’ll be in a stronger financial position in 12 months, the highest reading in seven years and up from a net 13% in the June quarter.

The strength of the pick-up is “surprising” given that unemployment is set to rise further over the coming year, curbing wages growth, Purdue said.

Finance Minister Bill English yesterday said government workers may have to live with as long as five years without a pay rise as government departments and agencies “think hard about how to live with little or no extra funding.”

The unemployment rate is expected to climb to 7.3% next year, the highest in a decade, from 6% currently, casting a shadow over the nation’s recovery, according to a survey of economists by the New Zealand Institute of Economic Research.

Today’s survey showed consumers are upbeat longer term, with a net 63% seeing better economic times in the next five years. Consumers currently feel worse off than they did 12 months ago, with a net 22% saying they’re poorer now, while a net 19% said it is a good time to buy major household items, up 4 points from the June survey.

Asked what they’d do with a $10,000 windfall, the majority of consumers still say they’d either save it or use the funds to repay debt.

Businesswire.co.nz

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