Consumer confidence lifted 2 points in December to 123, its third consecutive increase.
- The Current Conditions Index rose 3 points to 132, while the Future Conditions Index rose 3 points to 118.
- The proportion of households who think it’s a good time to buy a major household item lifted another 3 points to 44%, a solid level.
The ANZ-Roy Morgan Consumer Confidence Index rose 2 points to 123 in December. Households are more confident about both the here and now, and the future.
Turning to the detail:
- Consumers’ perceptions of their current financial situation rose 2 points, well above the average for the past five years. A net 19% feel financially better off than a year ago.
- A net 30% of consumers expect to be better off financially this time next year, up four points versus last month.
- A net 44% think it’s a good time to buy a major household item, up 3.
- Perceptions regarding the next year’s economic outlook rose another 5 points to a net 9% expecting conditions to improve, consistent with the lift in business confidence. The five-year outlook was unchanged at +15%.
- Confidence rose in three of the five regions, most sharply in the South Island outside of Canterbury. Wellington remains the most optimistic region and North Island regions outside the main centres the least.
- House price inflation expectations lifted in all regions, most sharply in Canterbury (up 1.2%pts to 3.8%). Auckland again had the weakest lift and continues to drag the chain (up 0.1%pts to 2.9%). The national average rose 0.4%pts to 4.1%, the strongest since April last year. General inflation expectations were unchanged at 3.1%.
The 2 point lift in consumer confidence took the series further above its historical average of 120. Confidence in both current and future conditions lifted, and the increase was broad-based across the various questions.
New Zealand households, unlike their Australian counterparts, are feeling pretty resilient. While debt levels are pretty high, the labour market is tight, wage growth is reasonable, mortgage interest rates have fallen considerably, and the housing market is lifting, which, while not good news for those not yet on the ladder, tends to spur spending.
Figure 2 shows that when house price inflation is strong, it has a more positiv impact on older consumers’ willingness to spend than for those aged 25-34. Recently, however, older consumers’ willingness to spend has been relatively less positive (while still strong in level terms). Partly this will reflect that it takes a while for housing market turns to impact. But it may also reflect that a larger proportion of older people’s income comes from interest on savings, and interest rate falls to record lows are not beneficial in that regard. Certainly, anecdotal evidence suggests that those no longer earning wage income are cutting back spending in response.
Our confidence composite gauge combines business expectations and intentions with overall consumer sentiment to capture both the demand and supply side of the economy and give a better indicator for growth than either series alone.
The composite lifted sharply this month (figure 3), primarily due to another lift in ANZBO indicators. It is consistent with our view that while the headwinds facing the economy are real, growth should bottom out around the 2% mark, as easing monetary conditions and remarkably resilient commodity prices (touch wood) feed through.
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The latest Roy Morgan Consumer Confidence Monthly Report is available on the Roy Morgan Online Store. It provides demographic breakdowns for Age, Sex, State, Region (Capital Cities/ Country), Generations, Lifecycle, Socio-Economic Scale, Work Status, Occupation, Home Ownership, Voting Intention, Roy Morgan Value Segments and more.
You can also view our monitor of Quarterly New Zealand Unemployment & Under-employment Estimates.
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