ANZ-Roy Morgan New Zealand Consumer Confidence virtually unchanged in July at 104.3

Consumer confidence was basically unchanged at 104.3 in July, still well under its historical average but also well off its lows.

• The net proportion of households who think it’s a good time to buy a major household item gave up 5 points, falling to 0%, a recessionary level.
• Just like the ANZ Business Outlook survey, it looks like the bounce may be done, and incomplete. Household incomes will come under more pressure from a weaker labour market as wage subsidies roll off.

The ANZ-Roy Morgan Consumer Confidence Index was steady in July. It has made back around half its fall, but seems to have run out of puff for now.

Turning to the detail:

• Consumers’ perceptions of their current financial situation fell 2 points to +2. The wage subsidy scheme and lower interest rates have helped, but this is a subdued level.
• A net 31% of consumers expect to be better off financially this time next year, barely changed from June.
• A net 0% think it is a good time to buy a major household item, down 5, suggesting the vigorous post-lockdown bounce in retail spending will peter out quite rapidly.
• Perceptions regarding the next year’s economic outlook lifted another 4 points but remains very low at -33%. The five-year outlook lifted 3 points to +22%.
• House price inflation expectations lifted 1%pt to 2.0%, higher in every region. They are weakest in Canterbury, and strongest in the North Island outside of Wellington and Auckland.
• General inflation expectations lifted from 2.9% to 3.3%.

A sense of relief at having (so far) dodged the worst pervades New Zealand. Consumer confidence is well off its lows. But there’s also an undercurrent of wariness, with huge uncertainty about the future. Many people are worried about their jobs (or have lost them already). Willingness to buy major household items remains at the levels prevailing in the last recession. This is directly at odds with both anecdote and data showing a remarkably vigorous bounce-back in spending, particularly on big-ticket items. It suggests that the current flurry of spending as households spend their ‘accidental’ lockdown savings and the cash they’d put aside for international holidays is likely to peter out relatively soon, as lower incomes bite.

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