New Zealand consumer confidence rose in April as kiwis became more confidence about their own financial position, giving them greater enthusiasm for buying major household items.
The ANZ-Roy Morgan consumer confidence index rose to 134 this month, from 132 in March. The current conditions rose to 130.3 from 125.7 and the future conditions index eased to 135.8 from 136.2.
"The economy is expanding rapidly, more jobs are being created, the housing market is still buoyant, the high New Zealand dollar is keeping the price of imported goods and those big-ticket items suppressed. Prospects for wages to move up are improving by the day," said ANZ Bank New Zealand chief economist Cameron Bagrie. "That's a chipper combination."
The Reserve Bank noted the "considerable momentum" in the economy when it lifted the official cash rate a quarter point to 2.75 percent and is expected to hike the OCR to 3 percent next week to head off increasing inflationary pressures. The ANZ-Roy Morgan composite index, which combines consumer and business confidence, implies annual economic growth of almost 6 percent.
"We're positive but not that bullish," Bagrie said. "We're picking solid as opposed to bumper spending trends." While consumer sentiment is elevated, household balance sheets remain heavily indebted and the savings rate remains poor, he said. At the same time, the central bank is raising borrowing costs.
The April survey of 958 people showed a net 13 percent felt they and their families were better off than a year ago, an improvement from 8 percent in last month's survey. Looking out a year, a net 40 percent felt they would be better off, up from 36 percent last month.
Those deeming it a good time to buy a major household item increased to a net 47 percent from 44 percent and those thinking house prices would rise in the next two years rose to 72 percent from 71 percent, while the size of the expected increase lifted to 3.9 percent from 3.8 percent.
Perceptions of the broader economy eased slightly. A net 33 percent saw better economic conditions in the next 12 months, down from 34 percent a month ago, and those seeing good times for the next five years slipped to a net 34 percent from 38 percent.