Consumers still upbeat, but less confident long term - survey

New Zealand consumers are still upbeat about how the economy is tracking, though their long-term confidence has tapered off, says a new survey. Photo / Herald on Sunday

New Zealand consumers are still upbeat about how the economy is tracking, though their long-term confidence has tapered off in recent times, according to the latest Westpac McDermott Miller Consumer Confidence survey.

The index was unchanged at 112 in the September quarter, indicating the number of optimists outweighs pessimists.

A net 9.7 per cent of 1,551 respondents expect their own financial situation to improve in the coming year, up from 9 per cent in the June quarter, and a net 2.1 per cent of respondents think the economy will deteriorate in the next 12 months, down from 6.7 per cent in the last quarter. That was more upbeat than the sharp fall in five-year horizon, with 41.2 per cent upbeat in the long-term future of the economy, down from 50 per cent in June.

"The survey did show a drop-off in longer-term economic confidence," said Dominick Stephens, Westpac Bank chief economist, in his report. "This could be a reflection of some of the recent bad news we've had around the global economy, or the fact that we're starting to see some of the longer-run costs associated with the Christchurch earthquake."

Last week, the ANZ-Roy Morgan consumer confidence survey showed sentiment fell from a seven-month high this month, though it stayed above the line where pessimists outnumber optimists.

The survey comes ahead of second-quarter gross domestic product and current account data this week, which are expected to show the pace of New Zealand's economic growth slowed in the three months ended June 30.

Westpac's Stephens said households are still cautious about their personal finances, but are more upbeat for the coming year.

"That bodes well for an ongoing gradual expansion in domestic spending," he said.

Households have been eschewing new spending over the past couple of years, using the low interest rate environment to repay debt. That's held back the country's economic recovery, though record-high prices for locally produced raw materials are expected to start seeping into spending behaviour at some point.

McDermott Miller's managing director of strategic planning consultancy, Richard Miller, said the survey showed 18- to 29-year-olds were the most confident age group at 126.4, followed by the 30- to 49-year-old bracket at 113.9, then over 50s at 105.6.

Miller said the main reason people were upbeat about the coming year was that the recession won't be as bad as previously thought, tax cuts will have a positive effect, and global conditions will improve.

Private sector consumers were less pessimistic about the next 12 months than public sector employees, though they were equally optimistic about the country's economic conditions on a five-year horizon.