Consumer confidence falls to three-year low as economic outlook dims

New Zealand consumer confidence fell to a three-year low in the third quarter as a deteriorating outlook for the economy weighed on sentiment.

The Westpac McDermott Miller consumer confidence index fell to 106 in the September quarter, from 113 in June, the lowest level since September 2012. That's still in positive territory where a reading above 100 indicates optimists outweigh pessimists, but below the historical average of 111.5. The present conditions index fell 6.9 points to 108.2, and the expected conditions index dropped 7.1 points to 104.6.

"The past three months have been a rough ride for the economy, with dairy farmers under pressure, signs that the Canterbury rebuild is peaking, and growing concerns over the health of the Chinese economy," Westpac senior economist Felix Delbruck said. "Consumers have become more cautious, particularly in rural areas. But, overall, spending appetites are still at moderately healthy levels."

Today's survey follows the ANZ-Roy Morgan consumer confidence report, which showed the mood of New Zealanders found a base in September after four months of declines. Firms and households have grown increasingly downbeat about the prospects for the economy as a slump in dairy prices spurred a round of interest rate cuts by the Reserve Bank.

In the Westpac survey, a net 15% of the 1550 people survey expect mainly bad economic conditions in the year ahead, compared to a net 4.8% seeing good times ahead in the June quarter. The five-year economic outlook was more upbeat, largely unchanged with a net 24% seeing good times over that period.

A net 3% of respondents said their current financial situation had deteriorated from the same time a year earlier, compared to 1.4% saying it had improved in the June quarter, and a net 4.6% expect their finances to get better in the year ahead, down from 5.9 percent.

Consumers were warier about buying major household items, with a net 20% saying now is a good time to buy, compared with 29% in June, and the lowest level since June 2012.

The survey ran between September 1 and September 11.

(BusinessDesk)