New Zealand consumer confidence fell to a seven-month low in May as two interest rate hikes and expectations for slower economic growth later this year sapped people's optimism.
The ANZ-Roy Morgan consumer confidence index eased to 127.6 this month, from 133.5 in April, and is 8 points off the pre-recession high. The current conditions index slipped to 123 from 130.3 and the future conditions index fell to 130.7 from 135.8.
"Higher interest rates are starting to bite," said ANZ Bank New Zealand chief economist Cameron Bagrie."The latest dent in confidence has translated into a slowing in expected economic growth over the second half of 2014.
"This is hardly ringing alarm bells - it's akin to moving from a gallop to a fast canter."
Government data last week showed retail sales grew at a slower-than-expected pace in the first quarter of this year in the lead-up to Reserve Bank kicking off a cycle of interest rate hikes in March and as the housing market slowed in response to restrictions on bank lending with small deposits. The Reserve Bank has signalled more interest rate hikes are to come and expects they will have a quicker impact with more borrowers on floating rates or fixed rates of one year or less.
The May survey of 1,047 people showed a net 10 percent of respondents were better off than a year ago, down from 13 percent in last month's survey. Looking out a year, a net 36 percent felt they would be better off, down from 40 percent the previous month. Perceptions of the broader economy fell for the fifth consecutive month, with a net 27 percent seeing better economic conditions ahead in the next 12 months down from 33 percent in April.
The biggest drop off in confidence was in those deeming it a good time to make a major household purchase, falling to a net 36 percent from last month's 47 percent.
Those thinking house prices would rise in the next two years remained static at 72 percent, predicting annual increases of 3.8 percent to 3.9 percent. Some 71 percent of respondents expect prices in general rise over the next two years at an annual pace of 3.1 percent, slower than the 3.2 percent pace seen in April.
This article is tagged with the following keywords. Find out more about MyNBR Tags
- Xero directors Drury, Winkler and Morgan cash in on 35% share price rally
- Dimension Data restructures, top salesman leaves
- Kirk Hope rumoured front-runner for top job at BusinessNZ, replacing O'Reilly
- Bizarre gay dating app dispute reaches NZ courts
- Tech expert's complaint about 'snake oil' ad upheld
Most listened to
- Campbell Gibson, Nick Grant and Chelsea Armitage chat about the inner workings of New Zealand media
- Paul Brislen discusses the 'snake oil' sales tactics of SalesConcepts
- Fonterra chief executive Theo Spierings reveals his ambitious China plan
- UDC Finance chief executive Wayne Percival talks about the company's profit
- Hamish McNicol discusses the latest court stories
- Trilogy International CEO Angela Buglass reviews another bumper result
- Eroad CEO Steven Newman talks about his company's revenue increase
- What do the latest terrorism attacks in Mali and Israel mean? Nathan Smith discusses the latest foreign affairs news
- NZ Windfarms departing director Michael Stiassny speaks out after board exit
- James Mayo talks about SOS Hydration's growth plans after Snowball offer
- Michael Wood on whether he would run in Mt Roskill
- SAFE's Abi Izzard quizzed over protest of a caged hen operation at Pukekohe