Consumer confidence slumps

Higher petrol prices have hit discretionary cash flow. Photo / Brett Phibbs

Outlook at lowest for three years

Consumer confidence has slumped to its lowest level in nearly three years in this month's ANZ Roy Morgan survey.

The survey's overall index fell six points from June levels and at 113.9 is now below its long-run average of 119.1.

All the survey's indicators deteriorated but the steepest decline was in respondents' view of economic conditions a year ahead. A net 2 per cent expect them to be worse, where a net 11 per cent were still positive last month.

"Economic headwinds have intensified and the impact of weaker dairy prices is beginning to percolate through the regions," said ANZ economist Philip Borkin. "The growth impetus from the earthquake rebuild is fading and global ructions and risks are clear to see."

But consumers remain more upbeat about their own households' prospects than the economy's.

"Yes, higher petrol prices have hit discretionary cash flow and the weaker New Zealand dollar chills what has been a strong real purchasing power story. However, the labour market remains reasonably solid, mortgage interest rates are falling, and nationwide house prices are still rising," Borkin said.

A net 4 per cent of respondents consider themselves better off financially than a year ago (down from a net 7 per cent last month) and a net 22 per cent expect to be better off in a year's time (a net 26 per cent in June).

A net 34 per cent still judge it a good time to buy a major household item, compared with a net 38 per cent in last month's survey. House price expectations have eased a touch from 5.3 per cent to 5.2 per cent.

"Auckland expectations hit a new high of 7.3 per cent while expectations were flat or eased in all other regions," Borkin said.

Positivity shrinks

• Survey index 113.9 - down six points from June and below long-run average.

• Net 2% expect economic conditions a year ahead to be worse.

• Net 4% consider themselves better off financially than a year ago.