Consumer confidence has tumbled, Aucklanders in particular taking a much less rosy view of the outlook than they were three months ago.
The Westpac McDermott Miller consumer confidence index was 120.2 this month, down 6.5 points from March. While that is still positive - anything above 100 represents more optimists
than pessimists - it is still the weakest reading for consumer sentiment for two years.
"Confidence remains at a high level, but it's the second consecutive quarterly decline and trends in these things matter," said Westpac chief economist Brendan O'Donovan. "Consumers remain happy in the here and now, but are much more wary about the future."
The decline in confidence was particularly steep in the main centres, especially Auckland.
O'Donovan puts this down to a waning of the "wealth effect" from housing. Growth in house prices has been levelling off in the major centres while it remains more robust in the regions.
"As long as consumers are willing to and able to shop, domestic spending should maintain enough momentum to to continue to propel the economy forward at a solid pace until early 2006," O'Donovan said.
But there were signs that the business cycle had passed its best-by date.
"Retail sale growth looks to have peaked, house sales are off their recent highs and the continued slump in business confidence suggests weaker growth in business investment over the coming year. These factors, combined with an export sector that is struggling under the weight of a high kiwi dollar, mean that growth is likely to be on a slippery slope from here."
The confidence index reflects answers to five questions. All recorded a decline from March to June, but the steepest drop was in response to the question: "Do you expect better or worse economic times over the coming year?"
Only a net 6.4 per cent expect better times, down from a net 24.4 per cent in March and a net 36 per cent in December.
But their view of their own financial position has remained almost unchanged with a net 6.8 per cent saying they are better off than a year ago and even more (a net 17.7 per cent compared with a net 19.9 per cent in March) expecting to better off in a year.
