Consumer confidence ‘creeping’ back to life — ANZ

Confidence is returning to the housing market. Photo / NZME

The latest ANZ-Roy Morgan consumer confidence survey shows optimism about the economy rising, albeit at a subdued level.

Expectations for the housing market were the strongest in almost two years.

Topline consumer confidence rose 2 points in October to 88.1, with mixed improvements across the questions, ANZ chief economist Sharon Zollner said.

By far the biggest jump was in the question about expected economic conditions “in New Zealand as a whole”, she said.

But the key question of whether it’s a good time to buy a major household item, the best retail indicator, fell 6 points to -38 per cent, she warned.

Inflation expectations also rose 0.3 points to 4.5 per cent, undoing last month’s fall.

Perceptions of personal financial situations fell 2 points to -25 per cent, but a net 16 per cent expected to be better off this time next year, up 1 point.

The strongest lift was in perceptions regarding the economic outlook in 12 months’ time that jumped 14 points to 18 per cent.

The five-year-ahead measure also lifted 2 points to a net 5 per cent positive.

House price inflation expectations lifted again, from 3.2 per cent to 3.8 per cent, the highest read in 20 months.

Lifts were seen in every region except the North Island outside Auckland and Wellington.

Understandably, those paying off a mortgage continued to be more cautious about spending than those who were not, Zollner said.

“It will be interesting to see over coming months whether the turnaround in the housing market causes this gap to close at all,” she said.

All up, the survey was a “mixed bag” for the Reserve Bank.

“Willingness to spend is low, as the RBNZ requires, but consumers’ inflation expectations are still inconsistent with the inflation target, and there hasn’t been much progress on that front in recent months,” Zollner said.

“House price inflation expectations are also lifting. In practice, this measure tends to reflect past house price moves rather than provide leading information about where the housing market is going, but it does suggest that people don’t think the lift seen in recent months is a flash in the pan.”

Overall, the survey fitted into the “watch, worry and wait” basket for the Reserve Bank, she said.

“We continue to expect that in time, the committee will conclude another hike in the Official Cash Rate is required to ensure progress in bringing inflation down continues.”