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ANZ-Roy Morgan New Zealand Consumer Confidence - Turbo Charged - up 4.3pts to 127.2

Consumer sentiment rose further in November, lifting 4 points to the highest level since early 2015. Confidence in current conditions and the future both lifted. The majority of responses were received prior to recent earthquakes. How confidence behaves going forward will be a key factor in determining any wider near-term economic fall-out.

SUMMARY

  • Consumer sentiment rose further in November, lifting 4 points to the highest level since early 2015.

  • Confidence in current conditions and the future both lifted.

  • The majority of responses were received prior to recent earthquakes. How confidence behaves going forward will be a key factor in determining any wider near-term economic fall-out.

  • Strong levels of confidence – a key flag-bearer for growth momentum – provide the economy with resilience to deal with challenges.

Consumer optimism has continued its ascent. The ANZ-Roy Morgan Consumer Confidence Index rose from 122.9 to 127.2, taking confidence to the highest level since April 2015. The gain in seasonally adjusted terms was more modest (from 126 to 129), but was still its sixth consecutive increase. Consumers are no longer in cruise control; it’s pedal to the metal.

ANZ-Roy Morgan New Zealand Consumer Confidence - November 2016 - 127.2

There is plenty of torque in the details. The Current Conditions and Future Conditions Indexes rose 4 points each, to 127.3 and 127.2 respectively.

  • Indicators for concurrent spending increased their RPMs. A net 13% feel better off compared with a year ago, which is the highest since June 2014. Consumer enthusiasm towards buying major household items also surged 7 points to a net 42%.

  • Forward-looking indicators also revved their engines. Net optimism towards the economy in 1 and 5 years’ time rose to a net 23% and 28% respectively, taking both back to levels seen in early 2015. Respondents’ views towards their own financial situation in 12 months’ time held at a respectable net 31%.

  • Regionally, all set faster lap times. Every region recorded stronger confidence in the month (both in unadjusted and seasonally adjusted terms), but Wellington took poll position after being mid-pack in October.

Strong levels of confidence reflect an economy that is performing well. The labour market is strengthening, cost of living changes remain historically low (every dollar earned goes further), dairying is no longer facing the risks it was, and earlier house price gains have given home owners a decent wealth boost. Our confidence composite gauge (which combines business and consumer sentiment) is pointing to GDP growth accelerating to north of 4%. We don’t actually think that is attainable, but is a strong directional signal nonetheless.

However, some dashboard warning lights are now beginning to flash. The majority of responses to this month’s survey were received prior to recent central New Zealand earthquakes. As was the case after the 2010/11 quakes, some hit to confidence is possible. To what degree this occurs will be a key determinant of the near-term economic impact. The housing market now looks to be slowing as LVR restrictions bite and borrowing rates look to be past their lows as global yields rise and banks chase deposits. Globally we are heading into the unknown as populist rhetoric and leadership gains the upper hand, which will have growth consequences.

The economy has some key safety features to steer it through smoothly. Strong momentum and elevated levels of confidence are important as they give the economy far more resilience to deal with negative shocks. Moreover, while there are certainly pressure points (Auckland housing, household debt levels), the economy doesn’t have the same widespread vulnerabilities and imbalances that have often tipped it over in the past when negative shocks have hit.

ANZ-Roy Morgan New Zealand Consumer Confidence Rating - November 2016 - 127.2

Click here to download the latest ANZ-Roy Morgan New Zealand Consumer Confidence Release PDF - November 2016.


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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 Quarterly New Zealand Unemployment & Under-employment Estimates.