NZ employment confidence rises, while consumer confidence dips in June

The Westpac McDermott Miller employment confidence index rose 1.5 points in the June quarter to a level of 117.4. Photo: Lynn Grieveson

New Zealand employment confidence rose while consumer confidence dipped as signs of slowing economic growth weighed on the outlook, according to two recent surveys by Westpac Banking Corp and ANZ.

The Westpac McDermott Miller employment confidence index rose 1.5 points in the June quarter to a level of 117.4, the highest level since 2008 and the fifth consecutive increase. Another survey by ANZ Bank New Zealand showed consumer confidence slipped in June.

The diverging shifts in sentiment come as the pace of the nation’s economic expansion eased to a pace of 0.5 percent in the three months to March 31, down from a 0.6 percent rate in the previous quarter. Indeed, the Reserve Bank of New Zealand on Thursday held its target interest rate at a record low, saying the next move could be up or down, a signal interpreted as dovish and sending the currency to its lowest level in two years.

“New Zealand is now into its eighth year of continued expansion, and the unemployment rate has fallen to the lowest level in a decade,” Westpac chief economist Dominick Stephens said in the report. “This firmness in economic activity has seen households reporting increased job opportunities. They are also feeling more secure in their jobs.”

“However, households are telling us that they think job openings will get a little harder to find over the coming year,” Stephens noted. “This easing has been modest to date, but it comes atop of other signs that economic growth is slowing. It adds to indications that the unemployment rate may struggle to push lower from here.”

McDermott Miller managing director Richard Miller pointed to the differences between the public and the private sector, saying those surveyed in the latter sector are more optimistic about the country's current employment situation.

“In particular, more private sector respondents believe that ‘jobs currently are plentiful’ than do their public sector counterparts," Miller noted.

Separately, the ANZ Roy Morgan consumer confidence index edged 1 point lower to 120 in June, down from 121 in May. The current conditions index rose 1 point to 125.7, above its historical average of 116.7, while the future conditions index fell 2 points to 116.2, below its historical average of 121.7.

Of the survey's 1,002 respondents, a net 7 percent expected good times financially in the next 12 months, down from 12 percent in May and the lowest since August 2016. In terms of the five-year outlook, a net 16 percent predicted continuous good times, down from a net 17 percent in May.

Consumers’ perceptions of their current financial situation dropped 2 points, with a net 11 percent of those surveyed reporting they're feeling financially better off than a year ago.

“While perceptions of current conditions remain strong, there is a degree of wariness about the future,” ANZ economist Miles Workman said in the report.

“The cocktail of moderating economic growth and heightened downside risks to the outlook may be proving a little too bitter for some, particularly given the backdrop of high household debt and elevated housing costs,” Workman noted. “Nonetheless, labour market conditions are supportive, with a lift in wage growth looking likely, while the housing market remains stable”.

General inflation expectations were unchanged from May, with respondents expecting a 3.9 percent increase per year over the next two years. Those surveyed in June expect house prices will rise 3.6 percent per year over the next two years, down from a 3.7 percent annual gain seen in May.