NZ consumer confidence at 7-month high

Photo / New Zealand Listener

New Zealand consumer confidence rose to a seven-month high in August, even in the face of volatile global financial markets, suggesting the jobs market may be picking up enough to lift Kiwis' appetite to spend.

The ANZ-Roy Morgan Consumer Confidence measure rose 3.9 points to 113.3 in August, the highest since January when it reached 117.1.

The survey showed a net 33 per cent of respondents deemed it a good time to buy a major household item, more than double last month's reading of 14 per cent.

The consumer survey comes after last month's National Bank Business Outlook showed business confidence rose for a fourth straight month in July, with better times seen ahead as Christchurch begins reconstruction after the earthquakes.

The economy grew at twice the expected pace in the first quarter and Reserve Bank Governor Alan Bollard may not rush to raise interest rates in the face of global turmoil.

"Such resilience in (consumer) confidence suggests that labour market conditions are improving sufficiently for consumers to start feeling more upbeat, or less downbeat, about prospects," said Khoon Goh, head of market economics and strategy at ANZ Bank.

The future conditions index rose to 118.1 in August from 115.6 in July. The current conditions index rose to 106.1 from 100.1.

Of the 1,048 people surveyed, a net 21 per cent said they were worse off than a year ago, a deterioration from last month's 14 per cent who felt worse off. Still, a net 27 per cent expect to be better off in a year's time, compared to 24 per cent seeing better times ahead in last month's survey.

A net 2 per cent of respondents said they think economic conditions will deteriorate over the coming 12 months, an improvement from a net 8 per cent who were gloomy on the general outlook in July.

A net 30 per cent expect the economy to improve over the coming five years, down a net 31 per cent a month ago.