NZ consumer confidence recovers in June as more jobs, rising house prices lift sentiment

Friday 17th June 2016

New Zealand consumer confidence recovered in June, reversing May's drop, as an improving labour market, house price growth and a stronger New Zealand dollar improved sentiment.

The ANZ-Roy Morgan consumer confidence index rose to 118.9 from 116 in May. The current conditions index gained four points to 122.7, while the future conditions index advanced two points to 116.4.

"The New Zealand economy is chugging along pretty well, despite clear strains in the dairy sector and the unease offshore," said ANZ Bank New Zealand chief economist Cameron Bagrie. "The domestic labour market continues to strengthen and Auckland house price love is now being shared by almost all other regions. The RBNZ is still talking about lower interest rates and the stronger NZD, while an issue for exporters, makes those larger consumer purchases or overseas travel more attractive."

Key risks offshore, such as global debt and 'Brexit', are worrying, but momentum and confidence can breed more of the same, Bagrie said, with the index's confidence composite suggesting a potential growth acceleration towards 4 percent.

"There are not many economies around the world experiencing that type of momentum at present," Bagrie said. "To be fair though, New Zealand should be growing strongly; the population is rising rapidly courtesy of booming migration. It’s a case of more bums on seats delivering more demand for goods and services."

Today's survey shows a net 10 percent of the 1,000 respondents said they were better off now than they were a year earlier, up from 5 percent in May and the highest in more than a year. A net 36 percent of respondents believe it is a good time to buy a major household item, up two points from May.

More respondents expected economic conditions New Zealand to improve in the future, with a net 9 percent anticipating good times financially for the country over the next 12 months, up from a net 6 percent a month earlier, while a net 16 percent anticipated continuous good times over the next five years, compared to a net 13 percent in May.

Consumers predicted an annual rate of inflation of 3.8 percent over the next two years, up from 3.3 percent, and a 6 percent rise in house prices in the same time, from 5.8 percent a month earlier.

On a regional basis, Auckland recorded the largest lift in confidence to be the most optimistic of the regions. Wellington confidence fell from high levels, but still took second place.

BusinessDesk.co.nz

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