NZ consumer confidence falls in May

New Zealand consumer confidence slid in May amid rising petrol prices and concerns about an accelerating housing market and the impact of lower interest rates on savings.

The ANZ-Roy Morgan consumer confidence index declined to 116.2 from 120 in April. The current conditions index fell four points to 119.3 while the future conditions index decreased by three points to 114.3.

"While moving at a marginally slower tempo, New Zealand consumers are still in a good rhythm," ANZ Bank New Zealand chief economist Cameron Bagrie said in his report. "We are left with an impression of consumers in a good mood."

New Zealand's economy is "showing generally good vigour" with gains in house prices and strong employment growth, bolstering incomes and wealth, ANZ said, adding that its combined measure of consumer and business sentiment suggested GDP growth of about 3% this year. However, the positive sentiment was being tempered by rising petrol prices and rising tensions over an accelerating property market that hampered first-home buyers and lower interest rates that impacted savers.

Today's survey results show a net 5% of the 1004 respondents said they were better off now than they were a year earlier, down from 8% in April, and a net 23% see themselves in a better position financially in 12 months' time, down from 28%.

A net 6% expect better economic conditions in the coming year, down from 9% in April and, over a five-year horizon, 13% expect more good times than bad times, down from 17% in the previous survey.

Respondents were less keen to buy big-ticket items, with a net 34% saying now is a good time to buy a major household item compared with 38% a month earlier, even as they expected slower price rises, predicting an annual pace of inflation of 3.3% over the next two years, compared to 3.5% in April.

On house prices, consumers expect an annual increase of 5.8% over the next two years, up from 5.3% in April.

On a regional basis, Wellington recorded its highest reading for 11 months while Auckland showed the largest fall, declining to its lowest reading since August 2015. The least confident consumers were in the South Island outside of Canterbury.

(BusinessDesk)