Aucklanders drive up consumer confidence

Optimistic Aucklanders have pushed up NZ confidence levels. Photo / NZ Herald

Optimistic Aucklanders have helped push consumer confidence, as measured by the ANZ-Roy Morgan survey, to its highest level for 2 years.

At 118.3 the survey's index is up 3.6 points from December and the highest it has been since June 2010.

But consumer sentiment regularly rises in January and when adjusted for seasonal effects confidence eased from December, though it remains in positive territory.

"We have been here before - every year for the past four years, in fact. Things just tend to fade," said ANZ chief economist Cameron Bagrie.

"I think there is still a fair bit of caution out there amongst households. It reflects two dynamics, [the state of] their balance sheets and a labour market that is not exactly frothy."

Whether the lift in sentiment would flow through to the "hard data" on actual spending and economic growth would depend on the labour market.

In that respect ANZ's job advertisement series, also released yesterday, is not encouraging.

It continues to suggest an unemployment rate hovering around the 7 per cent mark over the next six months, the bank said.

The New Zealand Institute of Economic Research's quarterly survey of business opinion this week also recorded more positive results from Auckland respondents than the rest of the coun-try.

"You need to look no further than the sharp lift in property prices for the reason of renewed enthusiasm in Auckland," Bagrie said.

The ANZ survey found house price expectations are highest in Auckland and Canterbury with both areas expecting a 4.4 per cent lift in prices over the next two years.

A net 38 per cent of respondents consider it a good time to buy a major appliance - the highest reading for that indicator since 2007.

Electronic card transactions data show that three-quarters of the lift in retail spending in the December quarter was on consumer durables.

Bagrie said the bank's composite confidence indicator, which combines results from the consumer survey and its monthly survey of business sentiment, was flagging economic growth of 2.2 per cent by mid-year.

"At that rate you are not going to see big falls in the unemployment rate."

But such relatively soft growth was not altogether a bad thing, Bagrie said, if it compelled decision makers to confront economic reality.

"As soon as you see strong growth complacency sets in and the hard decisions get deferred."