By BRIAN FALLOW
Consumer confidence has rebounded sharply over the past three months, as households shake off most of the gloom that overtook them in the June quarter.
The WestpacTrust McDermott Miller survey index jumped to 113 per cent in December from 98 per cent in September. A reading above 100 indicates more optimists than pessimists.
The index reflects the answers to five questions. The one behind the increase is whether respondents expect good or bad economic times over the next year.
A net 21 per cent expect better times, up 56 per cent on three months ago.
That adds weight to Sunday's One News-Colmar Brunton survey, which found 58 per cent of people picking an improvement in the economy over the next year, the highest level since 1976 and 64 per cent more than just two months ago.
WestpacTrust chief economist Adrian Orr said economic growth had picked up in recent months.
"It appears the low New Zealand dollar has kicked the economy along, with export revenues filtering into domestic spending."
But Mr Orr said that with world growth slowing, "the risk is that New Zealand is coming to the party just as the noise control officer arrives."
McDermott Miller managing director Richard Miller said the main reasons given by respondents for regaining confidence in the economy were better export prospects and the expectation that the kiwi dollar would strengthen.
"They realise that the former will generate employment and income growth, while the later will curb price rises for petrol and other imports which erode their spending power."
The main centres led the resurgence.
Auckland's confidence, which had dropped 31 points over the previous two quarters, recovered 23 - making the region the second-most confident (after Southland).
A net 4 per cent of respondents nationwide consider they are worse off than a year ago, but 20 per cent expect to be better off in the year ahead.
Bank of New Zealand chief economist Tony Alexander considers the rebound in confidence a bit surprising given that real wages and house prices have both fallen 1.5 per cent over the past year.
"It is likely that consumers are breathing a massive pre-Christmas sigh of relief that the economy is not heading for oblivion after all.
"Petrol prices have fallen 10c, the currency has strengthened over US2c, employment growth has been strong, state house rentals have been cut, ACC lump-sum payments [are to be] reintroduced and the weather has been pretty good," he said.
Mr Orr said his own view was that the economy would grow a solid 3 per cent in the year ahead as domestic spending offset a slower outlook for exports.
"It is only sustainable if domestic demand picks up its own momentum. Even then, the question is whether we can really grow if the rest of the world is not growing strongly.
"The answer is yes, but only for a short while."
Consumer optimism rebounds in spades
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