Reality check: ANZ reveals consumer confidence drops

Consumer confidence fell in the latest ANZ-Roy Morgan survey, with Wellingtonians particularly pessimistic after public sector cuts. Photo / Mark Mitchell

Consumer confidence has fallen back to earth after three months of steady improvement, the latest ANZ-Roy Morgan survey says.

Topline consumer confidence fell four points in October, down to 91.2.

“Falling interest rates had spurred a cautious recovery in consumer confidence from July, but October marked a sombre return to reality,” ANZ chief economist Sharon Zollner said.

Current and future confidence indexes both reported declines, with regional data pointing to deteriorating job security as a key factor.

The future conditions index fell 5.3 points in October down to 100.3, while the current conditions index fell two points to 77.6.

A net 14% expect to be better off this time next year, down 11 points.

Zollner said interest-rate relief wouldn’t be immediate for many households and there were plenty of challenges still to consider in the short term.

The perception of the economy in 12 months was also down, falling two points back to -19%, while the outlook for five years ahead fell three points to +6%.

Wellingtonians remained the most pessimistic, with public sector job losses having an impact on confidence.

“Given the labour market lags the broader economic cycle by around six months, deteriorating employment conditions are likely to be a headwind well into 2025,” Zollner said.

Those surveyed are certainly feeling the economic pressures still on them, particularly in their wallets.

Perceptions of current personal financial situations fell six points to -22%, its lowest since June 2024.

A net 23% think it’s a bad time to buy a major household item. While up 2 points, it is still sending soft signals about retail demand.

Areas outside the main centres led the charge on growing house price inflation expectations, up 3.2% to 3.4% year on year.

ANZ expects about 65% of mortgage holders to pre-fix their mortgage rates in the next 12 months.

As for inflation, the two-year-ahead expectations were unchanged at 3.8%.

Zollner believes with CPI inflation back within the 1-3% band, the inflationary challenges affecting Kiwis are coming to a close.

“That adjustment certainly hasn’t been without cost, and those costs will continue to be felt into next year, but brighter times do lie ahead.”

The good news for households was that the Reserve Bank was likely to deliver another 50bp cut by year end, she said.

The Reserve Bank cut the Official Cash Rate by 50bps in October.

The next OCR announcement is expected on November 27.

Tom Raynel is a multimedia business journalist for the Herald covering small business and retail.