Consumer confidence fell to a six-year low in the September quarter as New Zealand households fret about the outlook for their own finances and the general economy, according to the latest Westpac McDermott Miller survey.
The Westpac McDermott Miller consumer confidence index declined 5.1 points to 103.5 in the September quarter, the lowest level since September 2012 and below the long-run average of 111.3. The present conditions index fell 4.2 points to 107.5, slightly below the long-run average of 108.7, while the expected conditions index dropped 5.8 points to 100.8, lagging behind the long-run average of 113.0.
A reading above 100 indicates that optimists outnumber pessimists.
“New Zealand households are particularly concerned about the outlook for their own finances and the general economy over the next year,” said Westpac New Zealand chief economist Dominick Stephens. “Expectations for their own circumstances in the year ahead are at their lowest, outside of an actual recession, in the history of the survey.”
A net 7 percent of the 1,556 people surveyed between Sept. 1-10 expect the economy to deteriorate over the coming year, compared to 1.2 percent of respondents who thought it would improve in the previous quarter. A net 14.9 percent are upbeat about the economic outlook over a five-year period, down from 16.9 percent.
The decline in consumer confidence is less severe than a plunge in business sentiment since the Labour-led government was elected last September and implemented a series of policies that have impacted business.
Stephens said there is no straight-forward answer as to what is playing on consumers’ minds, noting smaller house price gains and rising fuel prices. Consumers may be starting to feel a real impact from the economic slowdown that began in 2017 “or it may just be that consumers are worried by what they are hearing about weak business confidence,” he said.
Regardless, the results challenge Westpac’s expectation that the economy will regain some momentum in the short term on the back of government spending.