Auckland keeps confidence high

By BRIAN FALLOW

Consumers continue to whistle a happy tune, especially Aucklanders.

The WestpacTrust McDermott Miller consumer confidence index slipped slightly from 121 in June to 119.6. But anything above 100 represents more optimists than pessimists, and the level of confidence is still not far below its heights in the mid-1990s.

Though most regions recorded lower confidence than three months ago, that was largely offset by Auckland, home to about a third of New Zealand's shoppers.

Auckland had arrived late to the ball but ready to party, even as some of the rural regions were leaving the dance floor, said WestpacTrust chief economist Adrian Orr.

"Confidence in the Auckland region continues to be bolstered by job growth and rising house prices."

Auckland's confidence rose 2.8 index points (making 7.7 for the year) to 127.8, the highest in the country.

By contrast, sharp falls were recorded in Northland, Canterbury and Southland, where lower export commodity prices and the delayed global recovery were dampening farmers' spirits.

"Despite the high level of consumer confidence, there are clear signs this business cycle upswing is past its best-by date," Orr said.

"Retail sales growth looks to have peaked, house sales are off their April highs and the slump in business confidence suggests business investment growth will be weak over the coming year."

But while businesses are faced with considerable uncertainty, consumers' cash flows are bolstered by continuing job and wage growth, while household wealth has been rising, driven by higher house prices.

"Domestic spending should maintain enough momentum to propel the economy forward until early 2003, when hopefully the global economy will have more oomph," Orr said.

"And with the new, more lenient approach to monetary policy, interest rates are likely to remain on hold until March 2003."

Of the five questions which determine the overall index, the main change was in "Do you expect good or bad economic times over the next 12 months in New Zealand?"

It fell a net 5.5 per cent, the most commonly cited reason being weakness in other countries' economies.

Consumers are more confident about buying major household items. A net 29 per cent consider this a good time to buy a big-ticket item, the highest level for three years.