Hawke's Bay Today reporter Doug Laing takes a closer look at the state of the Napier-Taupō highway on the first day open to the public since Cyclone Gabrielle. Video/Warren Buckland
Consumer confidence has lifted slightly but remains overwhelmingly negative, near historic lows.
The Westpac McDermott Miller Consumer Confidence Index rose 2.1 points to 77.7 in March.
That was off the back of a fall to record lows last quarter and ongoing concerns about inflation.
The number of New Zealanders pessimisticabout the economic environment still outweighs the number who are optimistic, by a wide margin.
“Higher living costs are squeezing every household across the country,” Westpac senior economist Satish Ranchhod said.
Despite the strong rise in nominal retail spending, the actual amount of goods we’re purchasing (spending adjusted for price changes) had fallen by around 4 per cent over the past year.
“In other words, even though we’re splashing out more cash, households are getting a lot less bang for their buck,” Ranchhod said.
“Crucially, the pressure on household budgets is set to become even more intense.”
The cost of necessities like food, housing and utilities had skyrocketed over the past year and for many households, those increases were compounded by a rise in borrowing costs, he said.
“Consumer prices, including food prices, are set to continue rising rapidly over the coming months. In addition, many borrowers now face refixing their mortgages at substantially higher interest rates.”
As well as financial pressures, many households across the upper and central North Island were dealing with the aftermath of January’s storms and Cyclone Gabrielle, Westpac senior agricultural economist Nathan Penny said.
“Confidence is especially low in Gisborne and Hawke’s Bay, where households, farmers and other businesses faced especially large disruptions. In some cases, activity will continue to be affected as infrastructure and other repairs are completed over coming quarters, if not years.”
Despite the strong rise in nominal retail spending, the actual amount of goods Kiwis are purchasing, meaning spending adjusted for price changes, fell about 4 per cent over the past year. Photo / Andrew Warner
Similarly, households in Auckland, Northland, Waikato and the Bay of Plenty – where there has been significant damage to housing and infrastructure following Cyclone Gabrielle and the recent floods – were feeling very pessimistic about the outlook for economic conditions in their respective regions.
The only region where optimists outnumber pessimists is in Nelson/Marlborough/West Coast, where the West Coast in particular is benefiting from the return of international tourists.
But even there, confidence remains well below average levels, Penny said.
While consumer confidence did not fall any further after the record low seen last quarter, the rise of 2.1 points in the Westpac McDermott Miller index to 77.1 for March was within the margin of error for the survey.
The majority of New Zealanders also expect economic conditions more generally will deteriorate over the next few years.
“For every consumer who is better off financially now compared with a year ago, there are more than two that are worse off,” McDermott Miller market research director Imogen Rendall said.
“Consumers’ assessment of their own future financial prosperity, as well as the economic future of New Zealand, is ominous.
“Households will continue to come under significant financial pressure in the coming months and it is hard to see things getting better anytime soon.”
The survey was conducted from March 1 to 14, with a sample size of 1559.
An index number higher than 100 indicates optimists outnumber pessimists. The margin of error of the survey is 2.5 per cent.
