Consumer confidence holds up despite drought and job cuts

Survey shows New Zealanders still relatively chipper about their economic circumstances.

New Zealanders continue to feel relatively chipper about their economic circumstances, despite the national spread of drought conditions and a string of high-profile job cuts, according to the latest Westpac McDermott-Miller confidence survey.

However, public servants are less optimistic than private sector workers and a gap is opening between men's and women's confidence levels, which Westpac senior economist Felix Delbruck puts down to construction activity, particularly in Christchurch, with far more men than women employed in that sector.

Low-income workers and the unemployed remain "very gloomy", while middle to high income earners show "steady improvement" in sentiment.

Likewise, the young and middle-aged are feeling better about the future than older New Zealanders, possibly reflecting the positive impact of low interest rates on borrowing costs and the negative impact of low rates on people living off their savings.

Perceptions about immediate circumstances have improved from the last survey, in December, with a net 10 percent of households expecting the next year to be worse than last year, an improvement from a net 12 percent negative in December.

While negative, the survey assessors describe the March figures as "now close to their historical average" and "the highest since March 2007, before the onset of a domestic recession followed by the global financial crisis in 2008".

Expectations about the future remain "fairly gloomy" by comparison, with a net 32 percent surveyed expecting good times in the next five years, a five percentage point fall on the level of optimism recorded in December.

"But it's clear caution is diminishing," says Mr Delbruck. "Households' perceptions of their finances are now the rosiest since late 2007 and their professed willingness to spend on big-ticket items is also close to post-2006 peaks."

On an index basis, the Consumer Confidence Index fell slightly in March to 110.8, from 111.1 in December.