NZ consumer confidence eases in April but remains above average

A slowdown in the property market weighed on consumer confidence. Photo / Rotorua Daily Post

New Zealand consumer confidence eased in April, weighed by a slowdown in the property market and growing expectations that interest rates will rise.

The ANZ-Roy Morgan consumer confidence index decreased to 121.7 from 125.2 in March, still above the average of 118. The current conditions index slipped to 123.2 from 125.9 while the future conditions index eased to 120.8 from 124.8.

"A slow-down in the property market, notably in Auckland, is likely to have been a factor. While price inflation figures are still positive, house prices are down and this impacts perceptions about whether consumers feel better off," said ANZ Bank New Zealand chief economist Cameron Bagrie.

New Zealand's economy has been underpinned by an expanding population, strong tourism, and a buoyant property market stoking consumer spending, while the labour market has remained robust with new jobs being created for the inflow of migrants.

ANZ's composite confidence gauge, which combines the business and consumer indicators, continues to flag good economic momentum, said Bagrie.

Today's ANZ report showed a net 9 per cent of the 1,000 people surveyed said they were better off now than a year ago versus a net 13 per cent in March. However, a net 33 per cent expect to be in a stronger financial position 12 months from now, compared to 32 per cent a month ago.

More people still see the economy improving this year although the level has eased, with a net 14 per cent predicting better times for the nation over the coming 12 months, compared to 21 per cent in March, while 15 per cent have an upbeat five-year outlook, down from 22 per cent.

Households were still optimistic about spending with a net 37 per cent saying now was a good time to buy a big-ticket item, down from 38 per cent in March. Annual inflation expectations rose to 4 per cent from 2.4 per cent in March, the first time it has hit that level in 17 months. House price inflation expectations for the next two years rose to 5.2 per cent from 4.6 per cent in March.

Data this week showed New Zealand consumer prices rose at their fastest annual pace in five-and-a-half years in the first quarter of 2017, further solidifying market expectations the central bank will be lifting rates sooner that it's forecasting.