Consumer confidence edges up in September from a 10-month low

New Zealand consumer confidence rose in September from a 10-month low, as households adjust to a more moderate pace of economic growth.

The ANZ-Roy Morgan Consumer Confidence Index rose 2 points to 127.7, paring August's 7 point drop to 125.5. The current conditions index rose to 124.1 from 123.4 and the future conditions index increased to 130.2 from 126.9.

Almost all indicators in the survey improved, with those saying they were better off financially than a year ago rose to a net 10 percent from 7 percent in August, while those expecting to be better off in a year's time rose to a net 39 percent, from 35 percent. The only indicator to decline in the survey was household intentions to buy a major item, which fell for a second month to a net 38 percent.

"There is not across the board euphoria, but it is certainly a story of elevation and liveliness," said Cameron Bagrie, chief economist at ANZ New Zealand Bank. "Consumers appear to be shrugging their shoulders and saying things look okay."

The survey comes after government figures out yesterday showed growth in annual gross domestic product accelerated to 3.5 percent in the June quarter from 3.3 percent in the March period.

Last week, the Reserve Bank kept the official cash rate on hold at 3.5 percent as it looks to assess the impact of four rate hikes earlier in the year. Past inflation figures have come in lower than the bank expected, as falling commodity prices, a cooling property market in Auckland, in part thanks to loan restriction imposed by the central bank, and a historically high currency have kept upward inflation pressures in check.

"Yes the economy has passed its peak; the latest GDP figures confirm a deceleration in momentum," Bagrie said. "Correspondingly, confidence measures, for both consumers and businesses, are off their highs. The cycle is now maturing from strong growth rates off lows to moderate growth off good levels"

The September survey shows those expecting New Zealand as a whole will enjoy good economic times in the year ahead rose to a net 24 percent from 20 percent, while looking five years out, it edged up to a net 27 percent from 26 percent.

Respondents expect prices in general to rise 3.9 percent in each of the next two years, up from last month's 3.3 percent and returning to July's level. Expectations for house price inflation also returned to July levels, rising to an annual 4.1 percent pace over the next two years, from August's 3.6 percent.

(BusinessDesk)