ANZ-Roy Morgan New Zealand Consumer Confidence down 0.6pts to 122.7 in January

Consumer confidence was unchanged in January (after rounding) at 123, holding onto its recent gains.

• The Current Conditions Index fell 2 points to 130, while the Future Conditions Index was unchanged at 118.
• Significantly, the proportion of households who think it’s a good time to buy a major household item lifted another 5 points to 49%.

The ANZ-Roy Morgan Consumer Confidence Index was unchanged at 123 in January, a solid level. Households aren’t gung ho, but are feeling resilient.

Turning to the detail:

• Consumers’ perceptions of their current financial situation fell 8 points. A net 11% feel financially better off than a year ago.
• A net 30% of consumers expect to be better off financially this time next year, unchanged from December.
• A net 49% think it’s a good time to buy a major household item, up 5.
• Perceptions regarding the next year’s economic outlook rose one more point to a net 10% expecting conditions to improve, well off its low of -10% in September. The five-year outlook eased two points to +13%.
• Confidence rose in two of the five regions, most sharply in the North Island outside of Auckland. Wellington remains the most optimistic region and Canterbury the least.
• House price inflation expectations lifted in Auckland and Other North Island centres, but eased a touch elsewhere. The regions remain stronger than the main centres. The national average rose 0.3%pts to 4.4% y/y, the strongest since May 2017. General inflation expectations rose to 3.7%.

New Zealand consumers are feeling pretty alright about things at the moment – the labour market remains tight, interest rates are low and the housing market is lifting again. While the latter is certainly not good news for everyone, it does tend to provide a bit of buzz on Main Street. While the headline confidence indexes were little changed (at very respectable levels), the proportion of respondents who think it is a good time to buy a major household item rose again to 49%, versus 36% just three months ago. This is only the third time the series has touched this level since January 2014, and will support retail sales and inflation. It is likely related to the sharp lift in house price expectations, though the correlation isn’t always exact (figure 3).

Our confidence composite gauge combines business expectations and intentions with overall consumer sentiment to capture both the demand and supply side of the economy and give a better indicator for growth than either series alone.

The composite held onto its gains this month (figure 4). It is consistent with our view that while the headwinds facing the economy should not be underestimated, growth should bottom out around the 2% mark, unless global risks come to fruition.

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