The number of people who expect economic conditions to improve is its highest since 2021. Photo / Michael Craig
The number of people who expect economic conditions to improve is its highest since 2021. Photo / Michael Craig
Consumer confidence reached its highest level this year as households’ spirits pick up ahead of Christmas, according to the latest Westpac McDermott Miller survey.
The bank said the Westpac McDermott Miller Consumer Confidence Index rose 5.6 points to 96.5 in the December quarter.
Anything below 100 indicates a pessimistic view.
The proportion of people who expect economic conditions will improve over the coming year reached its highest level since 2021, rising 6.6 points 103.4.
Westpac senior economist Satish Ranchhod said confidence was only back around the levels seen last December.
“While we often see a lift in households’ spirits at this time of year, there is reason to expect some of that Christmas cheer will continue into 2026,” he said.
“We’re starting to see some more encouraging signs in the economy, and hopefully 2026 will be a more positive year for most New Zealand households.”
Leading the charge was the increasing numbers of borrowers rolling on to lower interest rates.
“That process will continue into the new year and will help to boost households’ disposable incomes right across the country,” Ranchhod said.
“While we have seen some upwards pressure on borrowing rates recently, most borrowers who are refixing now will still be rolling on to much lower rates.”
Ranchhod said one-year fixed mortgage rates were around 130 basis points (bps) lower than this time last year.
Two-year fixed mortgage rates had dropped by 220bps since December 2023, he said.
Ranchhod said spending appetites have also been on the rise.
The number of people who say it’s a good time to make a major purchase rose 7.1 points to -3.5, according to the survey.
“Spending remains strongest in the lower South Island. But in contrast to the past year, we’re now seeing spending picking up right across the country. That includes Auckland, which is now the most upbeat part of the country,” Ranchhod said.
Women remain pessimistic at 90.6, despite seeing an increase of 7.2 points over the December quarter.
“Close to half of women believe they are worse off financially than they were a year ago, compared with just over a third of men,” said Imogen Rendall, market research director of McDermott Miller Ltd.
Rendall said confidence amongst younger generations was “relatively buoyant” in comparison to older New Zealanders.
Confidence for those aged 18-29 lifted 14.4 points to 108.2 in the December quarter. For those aged 30-49, confidence rose 9.5 points to 101.
Those aged 50+ saw confidence increase by just 1.8 points to 90.8.
“They remain firmly pessimistic this quarter,” Rendall said.
Cameron Smith is an Auckland-based business reporter. He joined the Herald in 2015 and has covered business and sports. He reports on topics such as retail, small business, the workplace and macroeconomics.
