Consumer confidence edges down this month, optimism still supports growth

Cameron Bagrie, chief economist at ANZ National Bank

New Zealand consumer confidence edged down for a second month, though the underlying optimism still supports the gathering economic momentum.

The ANZ-Roy Morgan consumer confidence index fell to 132 this month from 133 in February. The current conditions decreased to 125.7 from 127 and the future conditions index slipping to 136.2 from 137.1. ANZ Bank New Zealand chief economist Cameron Bagrie said the index remains buoyant, and on a seasonally adjusted basis is at its highest level since February 2005.

"Our composite growth indicator continues to flag potential for the economy to boom, indicating 6 percent growth," Bagrie said.

"We continue to rule out such a growth trajectory in practice given the limited availability of spare capacity in the economy. However, we'll side with the vibe; the economy is trundling along nicely," he said.

The survey comes a week after the Reserve Bank hiked the official cash rate a quarter-point to 2.75 percent as a means to clamp down on the threat of inflationary pressures.

The survey shows a net 76 percent of the 1,020 respondents expect prices to go up in the next two years, at an annual pace of 3.4 percent. A net 71 percent of respondents think house prices will rise over the next two years, at an annual pace of 3.8 percent.

A net 44 percent said now was a good time to buy a major household item, down from 47 percent in February.

A net 8 percent said they were financially better off than a year earlier, and a net 36 percent expect to be better next year. A net 34 percent expect good New Zealand economic conditions in the coming year, and a net 38 percent see good times ahead over the next five years.


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