Consumer confidence rises

By Phil Boeyen, ShareChat Business News Editor

Tuesday 27th March 2001

Consumer confidence is at its highest level since early last year according to latest figures.

The March quarter WestpacTrust - McDermott Miller Survey of Consumer Confidence has the index at 121.6, up from 113.8 in the December quarter and 98.1 in the middle of last year.

A value of 100 on the index means that the number of optimistic respondents equals the number of pessimistic respondents.

Wellington tops the latest regional confidence poll, with Auckland close behind, however confidence has dried up in regions which have lacked rainfall in recent months.

WestpacTrust chief economist, Adrian Orr, says the rise in confidence is consistent with recent local economic developments.

"Household disposable incomes have been bolstered by employment and wage growth. Meanwhile debt-servicing costs have been eased through lower interest rates. The exchange rate has also stayed near its record low level, leading to a continued inflow of export revenue and tourists."

However Mr Orr says there are some very concerning issues ahead.

"An ever-lower exchange rate is not a sustainable means by which to generate wealth, as New Zealand has proved to itself over earlier decades.

"Meanwhile, the global economy is deteriorating rapidly, led down by a slowing United States economy. New Zealand will not be able to avoid the eventual negative impact on its trade.

"Household debt levels are also high, constraining just how far New Zealand can grow on its own.

Most survey respondents pointed to the recent export boom as the source of their renewed confidence, with rises in employment and wage growth also mentioned.

Of the reasons for being less optimistic, ongoing concerns about government policy and rising cost pressures continue to dominate.

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