New Zealand consumer confidence hit a three-year high in September as a softer housing market and election uncertainty failed to dent optimism.
The ANZ-Roy Morgan consumer confidence index rose to 129.9 in September from 126.2 in August, the highest level since July 2014. Of that, the current conditions index rose to 127.3 from 124.9 and the future conditions measure rose to 131.6 from 127.1.
“A softer housing market has typically presaged a reduction in consumers’ appetite to spend. Together with the uncertainty over who will be prime minister next month, one could have been forgiven for thinking consumers would be in a slightly more cautious mood at present. However, that is not the case,” said ANZ Bank New Zealand senior economist Phil Borkin. A strong labour market and household income growth are helping shore up confidence, he said.
Also, while there is uncertainty over the September 23 election outcome, “what is clear is that the fiscal impulse over 2018/19 looks large as spending promises are flowing thick and fast,” he said.
A net 19% of those polled felt financially better off than they did a year ago, up from 12% in August and the highest level since December 2007. Those expecting to be better off in a year’s time rose to 36% from 35%, a three-year high.
For the economy over the next 12 months, a net 30% expected better times financially versus 25% last month, while on a five-year horizon, 29% expected good times financially versus 21% in the prior survey.
Those deeming it a good time to buy a major household item fell to 36% from 38%, while 67% expected prices to go up in the next 12 months, with an increase of 3.1%. That’s up from 66% and 3% in the prior survey.
A net 55% expected house prices to rise in the next two years, with an increase of 2.5%, the lowest since 2012. In August, 60% were expecting prices to rise by 3.4%.
ANZ’s confidence composite gauge, which combines business and consumer sentiment, continues “to flag strong economic momentum,” Mr Borkin said.
A net 18.3% of firms surveyed in the ANZ Business Outlook expect general business conditions to improve over the coming year, down from 19.4% in August. In seasonally adjusted terms, business confidence rose 3 points to a net 30%.
While the economy is unlikely to get to the 4% plus rates of gross domestic product growth the composition gauge is signalling, “it is certainly not pointing to the economy needing to come in for an emergency landing,” Mr Borkin said.