NZ consumer confidence slips in July, remains elevated; long-term view remains upbeat

New Zealand consumer confidence fell from a five-month high in July, but remained elevated, with a dip in those who thought it was a good time to buy a major household item and a broadly unchanged view that the next five years will generally bring good times.

The ANZ-Roy Morgan consumer confidence index slipped to 125.4 in July from 127.8 in June. Of that, the current conditions index dropped 4.5 points to 124.9 and the future conditions measure fell 0.9 points to 125.8.

ANZ Bank New Zealand chief economist Cameron Bagrie said that on a seasonally adjusted basis, confidence rose to its highest level since September 2014 and that today's survey shows consumer sentiment "remains at a strong level overall."

The consumer confidence survey follows the release last week of business confidence for June, which rose to a nine-month high, led by services and agriculture, suggesting economic growth was set to accelerate. Bagrie said a confidence composite gauge, combining consumer and business sentiment, "continues to flag very good economic momentum."

Consumers "have a lot to smile about" with a strong labour market, signs of wage increases, weaker fuel prices and cheaper retail goods driven by rivalry among retailers, he said. Added to that was some $2 billion in Budget 2017 for families "and pork barrel politics is rampant as the election looms."

A net 10 percent of those polled felt financially better off than they did a year ago, down from 14 percent in the June survey, while those expecting to be better off in a year's time slipped to 32 percent from 33 percent. For the economy as a whole over the next 12 months, a net 23 percent expected better times financially, down from 25 percent last month, while on a five-year horizon, an unchanged 23 percent expected good times financially.

Those deeming it a good time to buy a major household item fell to 39 percent from 45 percent, while 70 percent expected prices to go up in the next 12 months, with an increase of 3.4 percent. That's down from 71 percent and 3.5 percent respectively in the June survey.

A net 64 percent expected house prices to rise in the next two years, with an increase of 3.7 percent. In June, 63 percent were expecting prices to rise, by 4 percent.

The survey showed a cooling Auckland property market, where prices have fallen 4 percent since January, hasn't flowed through into gloomier sentiment in New Zealand's biggest city, with confidence "remaining elevated."

(BusinessDesk)