Consumer confidence slips to 14-month low
New Zealand consumer confidence fell to a 14-month low in November as households felt less optimistic about the future, with economic momentum cooling.
The ANZ-Roy Morgan consumer confidence index fell 1.6 points to 121.8 in November to its lowest reading in 14 months, though still above its long-term average of 118.8. The current conditions index eased 4.9 points to 119.5, while future conditions rose 0.6 points to 123.4.
"Levels of confidence remain high: it's not until you start dipping below average that we really get put on notice," ANZ Bank New Zealand chief economist Cameron Bagrie said in his report. "We're not reading too much yet into the trend lower in confidence. Surveyed confidence indicators never stay at their peaks for long - fewer people will say times are going to improve when times are already good!"
Lower than expected inflation figures, despite record levels of migration which should put upwards pressure on costs, has seen Reserve Bank governor Graeme Wheeler pause in his tightening cycle, after hiking the official cash rate 100 basis points to 3.5 percent between March and September. Meanwhile, falling dairy and log export prices have added to caution over expected economic growth.
"There are also some real economic risks (or growth holes) to take into account, such as the amplified slash to the dairy payout," Bagrie said. "House price gains are moderating."
Today's survey shows households still feel better off financially, compared to a year ago, with a net 4 percent of respondents more upbeat about their current position, but it's a drop from a net 9 percent in October, and a net 25 percent expect to be better off in a year's time, compared to 32 percent a month ago.
Of the 1,002 households surveyed by the bank, a net 22 percent expects good economic times in the next 12 months, up from a net 17 percent a month earlier, and looking five years ahead a net 23 percent expect continuous good economic times, compared to a net 19 percent in October.
People still thought it was a good time to buy a major household item, with a net 35 percent saying it was, down from a net 40 percent the previous month.
Of those surveyed, 73 percent predict interest rates to rise over the coming two years, at an annual pace of 3.8 percent, and 78 percent expect house prices to rise an annual 4.7 percent over the next two years.