Consumer confidence is the latest indicator to take a knock ahead of a report tomorrow on the level of economic activity for the first half of the year.
The latest Westpac McDermott Miller Consumer Confidence Index fell 5.1 points to 103.5 in September, the lowest level since September 2012. A score over 100 indicates more consumers are optimistic than pessimistic about their circumstances.
“New Zealand households are particularly concerned about the outlook for their own finances and the general economy over the next year,” Westpac chief economist Dominick Stephens says.
“Expectations for their own circumstances in the year ahead are at their lowest, outside of an actual recession, in the history of the survey.
“The groups that benefited from the government’s families package, which took effect from July 1, did report some improvement in their own circumstances. But this appears to have been outweighed by other concerns in most consumers’ minds.”
Mr Stephens singles out the slowdown in the housing market and rising fuel prices as reasons for the fall. Both would have been felt most acutely in the Auckland region, which saw a particularly sharp drop in confidence.
“It may be that consumers are starting to feel a real impact from the economic slowdown that began in 2017. Or it may just be that consumers are worried by what they are hearing about weak business confidence,” he says.
Aucklanders turn pessimistic
McDermott Miller managing director Richard Miller says urban Aucklanders are pessimistic for the first time since March 2009. Their index fell 10 points to 98.5 in the three months since the previous survey.
“Those working in the private sector, in particular, seem to be losing confidence in the economy, and are not expecting to be better off financially in the year ahead,” he says.
In contrast, urban Wellingtonians remain firmly optimistic, albeit a little less so than the previous quarter at 109.4. More of these consumers are employed in the public sector, which has an index rating of 111.5 compared with 102.7 for the private sector.
Mr Miller says further questioning of both groups shows diffidence about the effectiveness of government policies “but there is a sharp difference in belief about what drives their own region’s economic future.”
“Wellingtonians have confidence in their people to create good economic times over the coming year while Aucklanders expect population growth and new or growing industries to lift the economy,” he explains.
The survey was conducted from September 1-10 with a sample size of 1556. The margin of error of the survey is 2.5%.
Nevil Gibson
Wed, 19 Sep 2018
