Wider outlook lags personal optimism

By Brian Fallow

WELLINGTON - Consumer confidence and job advertisement data out yesterday provide evidence that the economy has rebounded from the June quarter's contraction.

After dipping in June, WestpacTrust's consumer confidence survey rose 0.8 per cent in September.

"We are seeing confidence consolidate at a level of modest optimism," WestpacTrust chief economist Bevan Graham said.

"Our view all along has been that the economy was never really going to fire until exports got going. We are increasingly confident that that will happen, but until we actually see it happen confidence is going to remain pretty subdued."

Other indicators, especially strong retail sales for July and August, suggested a return to positive economic growth in the September quarter, after a surprise 0.3 per cent contraction in June, Mr Graham said.

Meanwhile ANZ Bank's job advertisement series has shown further solid growth, rising 2.5 per cent last month to make 8.5 per cent for the September quarter.

With September's 2.7 per cent increase, job ads in Auckland are running 39 per cent above year-ago levels. Consumer confidence is highest in Auckland, having improved 6 per cent in the latest quarter.

Mr Graham said it was generally stronger in the main centres than in the provinces, where people were still feeling the lingering effects of two droughts and soft commodity prices.

While a net 20 per cent of respondents to the survey were positive about their own financial situation in a year's time, a net 3 per cent were negative about the economy's prospects.

That disconnection between people's own outlook and their sense of the full economic situation - also evident in business confidence surveys - was typical of this stage of an economic cycle, he said. People were feeling some of the warmth of recovery, but still hearing news about the economy contracting even though that was five or six months ago.