Consumer confidence dips in July

Consumers are pleased with weaker fuel prices and cheaper retail goods. Photo / 123rf

New Zealand consumer confidence fell from a five-month high in July, but remained elevated, with a dip in those who thought it was a good time to buy a major household item and a broadly unchanged view that the next five years will generally bring good times.

The ANZ-Roy Morgan consumer confidence index slipped to 125.4 in July from 127.8 in June. Of that, the current conditions index dropped 4.5 points to 124.9 and the future conditions measure fell 0.9 points to 125.8.

ANZ Bank New Zealand chief economist Cameron Bagrie said that on a seasonally adjusted basis, confidence rose to its highest level since September 2014 and that today's survey shows consumer sentiment "remains at a strong level overall."

The consumer confidence survey follows the release last week of business confidence for June, which rose to a nine-month high, led by services and agriculture, suggesting economic growth was set to accelerate. Bagrie said a confidence composite gauge, combining consumer and business sentiment, "continues to flag very good economic momentum."

Consumers "have a lot to smile about" with a strong labour market, signs of wage increases, weaker fuel prices and cheaper retail goods driven by rivalry among retailers, he said. Added to that was some $2 billion in Budget 2017 for families "and pork barrel politics is rampant as the election looms."

A net 10 per cent of those polled felt financially better off than they did a year ago, down from 14 per cent in the June survey, while those expecting to be better off in a year's time slipped to 32 per cent from 33 per cent. For the economy as a whole over the next 12 months, a net 23 per cent expected better times financially, down from 25 per cent last month, while on a five-year horizon, an unchanged 23 per cent expected good times financially.

Those deeming it a good time to buy a major household item fell to 39 per cent from 45 per cent, while 70 per cent expected prices to go up in the next 12 months, with an increase of 3.4 per cent. That's down from 71 per cent and 3.5 percent respectively in the June survey.

A net 64 per cent expected house prices to rise in the next two years, with an increase of 3.7 per cent. In June, 63 per cent were expecting prices to rise, by 4 per cent.

The survey showed a cooling Auckland property market, where prices have fallen 4 per cent since January, hasn't flowed through into gloomier sentiment in New Zealand's biggest city, with confidence "remaining elevated."