New Zealand consumer confidence rose to a nine-year high in the first quarter of this year with optimism about the economy in the year ahead approaching record levels.
The Westpac McDermott Miller Consumer Confidence Index rose to 121.7 in March, up from 120.1 in the December survey, to the highest level since the credit-fuelled boom times of 2005. A reading above 100 indicates more optimists than pessimists. A net 35 per cent of those polled expect good times for the economy over the year ahead, up from a net 27.8 per cent in the December quarter and the third-highest reading in the survey's history.
"Consumers' economic optimism, their assessment of their financial situation and their reported attitudes to spending have all continued to pick up," said Westpac senior economist Felix Delbruck. "Their attitudes towards their own finances and towards spending remain relatively cautious."
"We continue to be of the view that in the next couple of years, consumer spending will be a passenger as other sectors of the economy sit in the driver's seat."
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The survey results come less than a week after the Reserve Bank raised interest rates from historic low levels on concern a buoyant economy will push up inflation. The hike is the first in a series of rises expected over the next two years, which will hit the pockets of almost three-quarters of home mortgage borrowers who are either on a floating interest rate or will need to pick a new fixed interest rate within the next 12 months.
The Westpac survey showed a modest drop in the percentage of households expecting an improvement in their financial situation, at 10.6 per cent from 12.1 per cent in the fourth quarter.
"We continue to be of the view that in the next couple of years, consumer spending will be a passenger as other sectors of the economy sit in the driver's seat," Delbruck said.
The survey shows optimism about the economy in the year ahead has only been higher in June 1994, when a net 38.6 per cent of respondents were upbeat, and in December 2004 with a net 36.4 per cent positive reading.
Still, optimism about the next five years weakened, with a net 31.8 per cent optimistic in the first quarter compared with a net 34.4 per cent in last December's survey.
The present conditions index, which summarises how households' financial situation has changed over the past year and whether now is a good time to buy a major household item, rose to 115.5 in the first quarter from 113.1 in the fourth quarter of last year.
The survey of 1,594 people was conducted between March 1 and March 10.