Consumers see good times continuing as economy hums
Business confidence is less robust and this could be a “mixed blessing” at this stage of the economic cycle, ANZ chief economist warns.
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Most consumers believe they are better off than a year ago and a net 35% expect to be even better off in a year’s time, the latest ANZ-Roy Morgan consumer confidence index says.
The index for March rose to 128 from 127.7 in February, reflecting the benefits of low employment, solid income growth and still-low interest rates.
The current conditions and future conditions indexes also lifted slightly, by 0.4 and 0.2 points to 127.7 and 128.2 respectively. Both are considerably higher than they were at the end of last year.
Perceptions of the economic outlook lifted four points to a net positive 25%, well off the December lows, but the five-year outlook has eased from 29% to 25%.
ANZ chief economist Sharon Zollner says the confidence composite gauge – a combination of business and consumer confidence – is consistent with 2-3% GDP growth.
Business confidence is less robust and this could be a “mixed blessing” at this stage of the economic cycle, she says.
"If [consumer confidence] primarily reflects a frothy housing market, it can lead to more borrowing than is prudent, with a resulting boom-bust dynamic in consumption,” she says.
“Fortunately, at present the confidence appears to be founded on solid income growth.
"The strong labour market is supporting household incomes and various government policies are intended to provide a further boost while at the same time strong commodity prices are boosting exporter incomes.
“With household debt already at a record high as a proportion of incomes, a steady-as-she-goes housing market is just the ticket."
Confidence is highest in the Wellington region and has bounced up in Canterbury, to put it in second place. By contrast, Auckland has eased a point.
House price-rise expectations have risen nationally from 3.1% to 3.5%, with Wellingtonians having the strongest increase at 4.4%.
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Nevil Gibson
Wed, 04 Apr 2018
Wed, 04 Apr 2018
© All content copyright NBR. Do not reproduce in any form without permission, even if you have a paid subscription.
Consumers see good times continuing as economy hums
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