Consumer confidence ticks up in August

New Zealand consumer confidence rose in August with little sign that a cooling housing market is hurting consumer sentiment.

The ANZ-Roy Morgan consumer confidence index rose to 126.2 in August from 125.4 in July. Of that, the current conditions index was unchanged at 124.9 and the future conditions measure rose 1.3 points to 127.1.

ANZ Bank New Zealand chief economist Cameron Bagrie said that on a seasonally adjusted basis, confidence rose to its highest level since July 2014 and that today's survey shows consumers remain in a "buoyant mood."

The consumer confidence survey follows the release of business confidence for July which showed a net 19 percent of firms surveyed in the ANZ Business Outlook expect general business conditions to improve over the coming year, down from 25 percent in June. The latest housing data from the Real Estate Institute showed a sharp slowdown in house sales with volumes dropping 25 percent nationwide last month compared to July 2016, with Waikato sales dropping 32 percent and Auckland sales down 31 percent.

Bagrie noted, however, the moderation across the housing market "is not taking the wind out of consumers' sails." Among other things, house prices outside of Auckland are still lifting, albeit more modestly and "outside of the housing market, jobs are plentiful, and commodity prices are strong - it's no accident that the South Island (excluding Canterbury) is now the most upbeat region. The Budget put $2 billion on the table for families and the election lolly scramble is underway," he said.

A net 12 percent of those polled felt financially better off than they did a year ago, up from 10 percent in July, while those expecting to be better off in a year's time rose to 35 percent from 32 percent. For the economy as a whole over the next 12 months, a net 25 percent expected better times financially versus 23 percent last month, while on a five-year horizon, 21 percent expected good times financially, down from 23 percent in the prior survey.

Those deeming it a good time to buy a major household item fell to 38 percent from 39 percent, while 66 percent expected prices to go up in the next 12 months, with an increase of 3.0 percent. That's down from 70 percent and 3.4 percent in July.

A net 60 percent expected house prices to rise in the next two years, with an increase of 3.4 percent. In July, 64 percent were expecting prices to rise, by 3.7 percent.

(BusinessDesk)