Consumer confidence sinks to 10-month low

Kiwi consumers remain more prudent with spending than before the global financial crisis, says ANZ. Photo / Paul Taylor

New Zealand consumer confidence fell to a 10-month low in August, suggesting rising interest rates, weaker commodity prices and waning house price inflation are denting sentiment in an economy that may be growing at a slower pace.

The ANZ-Roy Morgan Consumer Confidence Index fell 7 points to 125.5, snapping two months of gains. The current conditions index eased to 123.4 from 126.3 and the future conditions index dropped to 126.9 from 137.

Confidence dipped across all indicators in the survey. Those saying they were better off financially than a year ago fell to a net 7 per cent from 9 per cent, while those expecting to be better off in a year's time fell to 35 per cent from 40 per cent. The survey comes after the Treasury this week shaved its forecasts for economic growth, while still seeing enough tax revenue to return to surplus next year.

"The economy may be moderating from a gallop to a canter but we're still growing solidly," said Cameron Bagrie, chief economist at ANZ New Zealand Bank. "Various leading indicators of momentum - the tightening in financial conditions and lower commodity prices - foretell a deceleration in growth. Conversely, lagging indicators such as employment growth remain more robust."

The August survey shows those expecting New Zealand as a whole will enjoy good economic times in the year ahead fell to a net 20 per cent from 34 per cent, while looking five years out, it fell to a net 26 per cent from 38 per cent.

Asked whether it was a good time to buy a major household items, a net 40 per cent said yes, down from 44 per cent a month ago. Those expecting prices in general to rise in the next two years fell to a net 3.3 per cent from 3.9 per cent. Those seeing a rise in house prices in that period slipped to a net 3.6 per cent from 4.1 per cent.