NZ consumer confidence eases, although more people feel better off

New Zealand consumer confidence eased in February, although remained above average, with more consumers feeling better off personally than they did a year earlier.

The ANZ-Roy Morgan consumer confidence index decreased to 127.4 last month from 128.7 in January but was up on a seasonally adjusted basis. The current conditions index slipped two points to 128 while the future conditions index dropped one point to 127.

New Zealand's economy has been underpinned by an expanding population, strong tourism, and a buoyant property market stoking consumer spending while the labour market has remained robust with new jobs being created for the inflow of migrants.

"The economic landscape looks pretty radiant for consumers," ANZ Bank New Zealand chief economist Cameron Bagrie said in a note. "A high NZ dollar is keeping imported products cheap. Wage gains might be modest but income growth is still up 4.8% on a year ago, courtesy of strong employment growth.

"Household (and consumer) wealth/balance sheets have been given a huge fillip courtesy of house price gains (though slowing of late). Dairy sector incomes are on the recovery path. Interest rates have risen from their lows, potentially denting borrowers' disposable income, but it's supporting depositors and savers, a group often forgotten about."

ANZ's composite confidence gauge, which combines the business and consumer indicators, estimates annual GDP growth rising past 4% through the rest of the year. Mr Bagrie said the bank doesn't think the economy will grow that fast, but the overall message was for strong growth.

A net 15% of the 1000 people surveyed said they were better off now than a year ago, the highest reading since early 2008, while a net 31% expect to be in a stronger financial position 12 months from now, compared to 34% a month ago.

More people see the economy improving this year with a net 26% predicting better times for the nation over the coming 12 months, compared to 25% in January, while 24% have an upbeat five-year outlook, down from 25%.

Households were still optimistic about spending with a net 41% saying now was a good time to buy a big-ticket item, down from 49% in January, and annual inflation expectations eased to 3.6% from 3.7%. House price inflation expectations were unchanged from January at 4.3% per year for the next two years.

(BusinessDesk)