New Zealand consumer confidence declined broadly in the June quarter as the pace of the country’s economic growth cooled along with the housing market, while fuel prices rose, according to the latest Westpac McDermott Miller consumer confidence survey.
The Westpac McDermott Miller consumer confidence index declined 2.6 points to 108.6 in the June quarter, taking it below the survey’s long-run average of 111.4.
The present conditions index increased 0.5 points to 111.7, above the long-run average of 108.7, while the expected conditions index dropped 4.6 points to 106.6, below the long-run average of 113.1.
A reading above 100 indicates that optimists outnumber pessimists.
“The fall in confidence in the June quarter was spread widely across regions, age groups and income levels,” Westpac chief economist Dominick Stephens said in the report. “However, the fall was not particularly large, and speaks to more of a general malaise among households rather than specific worries or events.”
To be sure, consumers with household incomes of between $30,000 and $50,000 were the notable exception — with the group's confidence rising 3.1 points, suggesting government plans to improve financial conditions for lower-income households have bolstered the group's outlook, according to McDermott Miller managing director Richard Miller.
A net 1.2 percent of the 1,555 people surveyed between June 1 and June 11 expect the economy will improve over the coming year, down from 11.7 percent in the previous quarter, while a net 16.9 percent are upbeat about the economic outlook over a five-year period, down from 17.9 percent.
“The drop in consumer confidence is consistent with the recent evidence that the edge has come off the economy’s upturn,” Stephens noted. “A cooling housing market has contributed to a slower pace of growth in the last few quarters, and rising fuel prices are eating into households’ budgets.”
The number of households who said they consider now a good time to purchase a major household item climbed 3.7 points to 26.2 percent in the June quarter, exceeding the long-run average of 26.1 percent. However, this may reflect an expectation of price rises rather than a greater appetite to spend, according to the report.
“With a range of new government policies that are likely to dampen house price growth in the years to come, it will be important to watch how households’ attitudes to spending and saving evolve,” according to Stephens.