Consumer confidence at 4-year low as people fret about the future

Consumer confidence fell to its lowest level in four years. Photo / 123RF

Consumer confidence fell to its lowest level in four years as people grew more wary about the future, but low interest rates mean people still think it's a good time to buy big-ticket items.

The ANZ-Roy Morgan consumer confidence index fell to 113.9 in September from 118.2 in August with the current conditions index down 1 point at 126 and the future conditions index down 6 points at 106.

Confidence remains below the historical average of 120 as "consumers are particularly wary about what the future may bring," said ANZ chief economist Sharon Zollner.

Of the 1,000 respondents to the consumer confidence survey, a net 11 per cent said they are better off now than they were a year ago, down from 16 per cent in August, while a net 23 per cent expect to be doing better in 12 months, down from 27 per cent in August.

Perceptions regarding the next year's economic outlook for the country as a whole fell 9 points to a net 10 per cent expecting conditions to worsen, the lowest in four years.

However, a net 41 per cent still see now as a good time to buy big-ticket items versus 39 per cent in August.

Lower interest rates are likely behind the robustness in the proportion of people thinking it is a good time to buy a major household item, said Zollner. The tight labour market is another key support, although employment indicators have deteriorated markedly and is a vulnerability going forward, she added.

The central bank left the official cash rate at a record low 1 per cent earlier this week but signalled "there remains scope for more fiscal and monetary stimulus, if necessary, to support the economy and maintain our inflation and employment objectives."

Respondents predict prices will rise an annual 3.5 per cent over the next two years, up from 3.2 per cent in August.

Those surveyed still expect house prices to lift 2.8 per cent a year, unchanged from the prior month.

Zollner said the composite gauge of the business and consumer surveys is in line with her view that while "slippage in economic growth is set to continue over the second half of the year as the economy battles headwinds, the fundamentals for the New Zealand economy remain decent."