KEY POINTS:
The rate at which consumer credit applications are slowing in response to tougher economic conditions has tailed off and there are encouraging early signs of growth, suggesting consumer confidence may be improving, Veda Advantage says.
The credit information company said consumer credit applications in December, for personal loans, hire purchase, and credit cards, were down 6 per cent on the same month in 2007.
However, that's far better than the average year-on-year drop of 13 per cent seen from August to November.
"While talk of a recovery may be premature, the steep decline of the credit market in 2008 could be slowing up," said Veda Advantage managing director John Roberts.
"We won't know until January's figures are available whether December was an aberration or not, but that is one of the trends we will be looking at when we release our six-month economic report in February. Possibly the impact of lower fuel costs, lower interest costs and reduced taxation are re-instilling some consumer confidence."
Roberts said he was also encouraged by lower than expected default numbers for December.
"We will be watching default figures for January and February with interest as that is the period when people are hit with their credit card bills from the Christmas period."
Roberts said initial January data he was seeing [were] cause for "cautious optimism".
"There is definitely a bit of strength in credit applications again. In the first two weeks of January, credit application levels were slightly above last year, and last week's figures were up 10 per cent. There's certainly a bit of growth."
Roberts believed Veda Advantage's data was a reasonably accurate barometer of consumer confidence and having entered the economic downturn before most countries, New Zealand may recover sooner.