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Home / Business / Economy

Kiwis shrug off world's woes

Brian Fallow
By Brian Fallow
Columnist·NZ Herald·
11 Aug, 2011 05:30 PM3 mins to read

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Big household appliances are looking more affordable. Photo / Natalie Slade

Big household appliances are looking more affordable. Photo / Natalie Slade

Consumers are largely brushing off overseas economic woes, for the time being at least, an ANZ survey has found.

The ANZ-Roy Morgan survey of consumer confidence for August rebounded to its highest level since January.

The confidence measure rose 3.9 points to 113.3, more than reversing the 3.1 point drop in July.

The rise in confidence was pleasing, considering the turbulent economic backdrop overseas, the bank's head of market economics and strategy, Khoon Goh, said.

The survey was conducted between July 25 and August 7.

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That period was marked by political brinkmanship in Washington over the US debt ceiling, the Reserve Bank indicating interest rates were likely to rise soon, an escalation of the European debt crisis, steep falls in world sharemarkets and a soaring exchange rate.

"Given such a backdrop, one would have expected consumer confidence to have taken a knock," Goh said.

"The fact that it managed to rise shows that New Zealand consumers are largely brushing off overseas woes, for now anyway."

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It suggested domestic conditions had improved enough for consumers to feel more positive about their prospects.

"Given that the New Zealand equity market has taken a beating and house prices are not really going anywhere, this leaves an improving jobs market as the most likely candidate for explaining the rise in confidence," Goh said.

There was a jump in the number of respondents who consider it a good time to buy a large household appliance, to levels last seen before the global financial crisis.

"The high New Zealand dollar may be a factor, but it may also indicate more willingness by consumers to loosen the purse strings," he said.

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Tuesday's figures on last month's electronic card transactions, which capture about 60 per cent of retail spending, were also seen as positive.

Purchases charged to cards rose 0.4 per cent last month on top of a 1.1 per cent increase in June.

Another indicator yesterday also pointed to encouraging momentum in the economy against icy overseas headwinds.

The BNZ-Business New Zealand performance of manufacturing index (PMI) registered 53.2, securely in the zone which indicates expansion.

On a three-month rolling average basis the PMI is at its strongest for a year, driven by strength in new orders.

The survey's employment gauge also improved, for the third month in a row.

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BNZ economist Doug Steel said the PMI and the electronic card transaction data, indicated the economy had a decent amount of momentum to carry it through some short-term nervousness in world financial markets.

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