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ANZ-Roy Morgan New Zealand Consumer Confidence - Bark Turns to Bite

Consumers reported a lower level of confidence in May, with the ANZ-Roy Morgan Consumer Confidence measure easing 6 points to 128 – down a cumulative 8 points from the high of 136 recorded in January.
  • Consumers remain upbeat, but the level of sentiment has eased to a six month low.

  • Weaker household sentiment was reflected across most demographics.

  • While the finger can be pointed at higher interest rates as undermining confidence, we’re still tracking high levels of confidence across the economy.
Consumers reported a lower level of confidence in May, with the ANZ-Roy Morgan Consumer Confidence measure easing 6 points to 128 – down a cumulative 8 points from the high of 136 recorded in January. The index remains high by historical standards, notwithstanding two interest rate hikes by the Reserve Bank aimed at cooling households’ spending enthusiasm.

It appears that higher interest rates are starting to bite with a drop in confidence across all five questions that we ask to gauge household sentiment. When we aggregate our questions into current and future components, the Current Conditions Index eased 7 points, while the Future Conditions Index eased 5 points. However, while interest rates are on the ascent and consumers more cautious, there is still much for households to smile about: employment growth is on the up, a high NZD dollar continues to suppress tradable inflation, making those big-ticket items cheaper, and a strongly performing economy will invariably be reflected in wage growth.

Across the five questions we use to gauge household sentiment, the largest reduction in confidence related to whether consumers thought it was a good or bad time to buy a major household item. This component fell from +47 in April to +36 in May; that’s still a high reading, though the lowest level in six months. The next-largest drop in sentiment was with respect to general economic conditions over the next 12 months, with expectations easing from +33 in April to +27 in May.

ANZ-Roy Morgan New Zealand Consumer Confidence - May 2014

The latest dent in ANZ-Roy Morgan New Zealand Consumer Confidence has translated into a slowing in expected economic growth over the second half of 2014. With both business and consumer confidence measures now coming off their peaks, our Composite Confidence gauge is projecting 5½ percent growth later in the year, down from around 6 percent growth expected a couple of months ago. This is hardly ringing alarm bells – it’s akin to moving from a gallop to a fast canter. The question continues to be whether the economy has the capacity to meet what still looks like very robust demand.

ANZ-Roy Morgan New Zealand Consumer Confidence - May 2014

Click to download the full ANZ-Roy Morgan New Zealand Consumer Confidence Release - May 2014.

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Related Research Reports

The latest Roy Morgan Consumer Confidence Monthly Report is available on the Roy Morgan Online Store. It provides demographic breakdowns for Age, Sex, State, Region (Capital Cities/ Country), Generations, Lifecycle, Socio-Economic Scale, Work Status, Occupation, Home Ownership, Voting Intention, Roy Morgan Value Segments and more.

You can also view our monitor of Monthly Australian Unemployment & Under-employment Estimates.