New Zealand consumer confidence rose to a nine-year high in the first quarter of this year with optimism about the economy in the year ahead approaching record levels.
The Westpac McDermott Miller Consumer Confidence Index rose to 121.7 in March, up from 120.1 in the December survey, to the highest level since the credit-fuelled boom times of 2005. A reading above 100 indicates more optimists than pessimists. A net 35 per cent of those polled expect good times for the economy over the year ahead, up from a net 27.8 per cent in the December quarter and the third-highest reading in the survey's history.
"Consumers' economic optimism, their assessment of their financial situation and their reported attitudes to spending have all continued to pick up," said Westpac senior economist Felix Delbruck. "Their attitudes towards their own finances and towards spending remain relatively cautious."
We continue to be of the view that in the next couple of years, consumer spending will be a passenger as other sectors of the economy sit in the driver's seat.
The survey results come less than a week after the Reserve Bank raised interest rates from historic low levels on concern a buoyant economy will push up inflation. The hike is the first in a series of rises expected over the next two years, which will hit the pockets of almost three-quarters of home mortgage borrowers who are either on a floating interest rate or will need to pick a new fixed interest rate within the next 12 months.
