Consumer confidence lifts – 'but we've been here before'
Kiwis may be more confident and feel like buying a major item, but are warned not to get too carried away just yet.
The ANZ Bank's latest consumer confidence surveys shows a pick-up – but the bank's own economist is warning not to get too carried away with it just yet.
The latest monthly survey shows a mood shift upwards: its index shows a lift from 110.2 to 114.0 in April.
That overall rise hides some contradictory data: households still feel worse off, albeit less so (the index shows a negative rating of -4 instead of -10 last month) but they also believe it’s a good time to buy a major item, and sentiments towards general well-being also rose further into the positive area.
"You never want to over-react much to one or two month's numbers – we've been here before," warns ANZ Bank chief economist Cameron Bagrie.
"We saw these sorts of numbers in early 2010 as well – sentiment picked up, and then it just rolled.
"There's some reason for optimism, certainly. New Zealand has made some progress getting its balance sheet in order.
"But we've still got some major structural issues – the current account deficit is at 4% and is going to deteriorate as the economy picks up, and households are only just barely saving.
"We've still got some big economic headwinds, we just don't have the howling gale we had a few years ago."
The high New Zealand dollar, which is making imports cheaper, probably has little impact on the consumer mood, he says.
While imports are cheaper, the high dollar hits the export sector – at least those trading in US dollars – and that in turn hits the labour market, so the impact probably balances out, he says.
"The sort of thing that has a greater impact are every day items like the price of petrol, and although that's been high, its been capped to a certain degree by the high dollar.
"I shudder to think what the price at the petrol pump would have been if the dollar had been lower."
Rob Hosking
Wed, 18 Apr 2012
Wed, 18 Apr 2012
© All content copyright NBR. Do not reproduce in any form without permission, even if you have a paid subscription.
Consumer confidence lifts – 'but we've been here before'
20153