Consumer confidence rebounds in latest survey

Photo / Janna Dixon

Household confidence rebounded to more 'normal levels' in the June quarter, in a sign the economy weathered the disruption from the February earthquake better than first thought.

The latest Westpac McDermott Miller Consumer Confidence Index rose to 112 points from 97.9 during the previous quarter as people's perceptions of their own financial conditions continued to improve.

An index of 100 indicates that pessimists outnumber optimists, although the series may be above or below 100 on average.

Interviews were carried out between June 1 and 12, and included Christchurch residents - but responses were taken before Monday's earthquake.

"After being badly dented by February's earthquake, New Zealand household confidence has rebounded to more normal levels," said Westpac chief economist Dominick Stephens.

"About as many people now expect good and bad economic times in the year ahead as they did last December."

"Not surprisingly, the survey shows that conditions remain challenging for Cantabrians. But along with recent recoveries in business confidence and retail spending, today's consumer confidence data are a sign that the wider economy has weathered disruption from the earthquake better than we, or the Reserve Bank, might have feared back in March."

The survey also highlighted more regional optimism among Aucklanders and across dairy exporting regions, Stephens said.

"That said, we're talking about a modest increase in spending off a very soft base, and confidence overall remains weaker than in mid-2010, before the economy slowed and the September Canterbury earthquake hit."

Stephens said he doubted the latest figures would challenge the Reserve Bank's economic outlook or his expectation that the bank will begin hiking the OCR in December.

The recovery in confidence was led by a rebound in households' outlook for the New Zealand economy over the year ahead, with a net 6.7 per cent of households now expecting bad economic times in the next 12 months, down from 42.5 per cent in March.

The recovery in confidence was led by a rebound in households' outlook for the New Zealand economy over the year ahead, with a net 6.7 per cent of households now expecting bad economic times over the next 12 months, down from 42.5 per cent in March.

In the March survey, more than half of consumers surveyed said the Christchurch Earthquake was the main reason for expecting bad economic times in the next twelve months.

"The reasons changed markedly in the June survey, with only some 12 per cent attributing bad times ahead to the earthquake," Richard Miller, managing director of McDermott Miller said.