New Zealand consumer confidence has risen as Kiwis become more confident about their own financial position, giving them greater enthusiasm for buying major household items.
The ANZ-Roy Morgan consumer confidence index rose to 134 in April, from 132 in March. The current conditions rose to 130.3 from 125.7 while the future conditions index eased to 135.8 from 136.2.
“The economy is expanding rapidly, more jobs are being created, the housing market is still buoyant, the high New Zealand dollar is keeping the price of imported goods and those big-ticket items suppressed. Prospects for wages to move up are improving by the day,” said ANZ Bank New Zealand chief economist Cameron Bagrie. “That’s a chipper combination.”
The Reserve Bank noted the “considerable momentum” in the economy when it lifted the official cash rate (OCR) a quarter point to 2.75 per cent. It’s expected to hike the official cash rate to three per cent next week to head off increasing inflationary pressures.
The ANZ-Roy Morgan composite index, which combines consumer and business confidence, implies annual economic growth of almost six per cent.
“We’re positive but not that bullish,” Mr Bagrie said. “We’re picking solid as opposed to bumper spending trends.”
While consumer sentiment is elevated, household balance sheets remain heavily indebted and the savings rate remains poor, he said. At the same time, the central bank is raising borrowing costs.
The April survey of 958 people showed 13 per cent felt they and their families were better off than a year ago, an improvement from eight per cent in last month’s survey.
While 33 per cent saw better economic conditions in the next 12 months, down from 34 per cent a month ago.