Mortgage rates, dairy sector boost outlook.

New Zealand consumer confidence rose for a second month after hitting a three-year low in August, helped by an improved outlook for the dairy sector and lower mortgage interest rates.

The ANZ-Roy Morgan consumer confidence index increased 4 points to a four-month high of 114.9. The current conditions index rose to 115.4 from 114.9, while the future conditions component lifted to 114.6 from 108.1.

New Zealanders are feeling less gloomy as dairy prices start to recover from a slump and homeowners benefit from low mortgage rates as regional property values are bolstered by a spillover from the heated Auckland market.

Reserve Bank governor Graeme Wheeler said yesterday that recent economic indicators had been more encouraging, although further easing in interest rates seems likely.

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"Consumer confidence changed key this month and is hitting a slightly higher note," said ANZ Bank New Zealand senior economist Philip Borkin. "A few months back the economy was off key and losing fans.

"Sentiment had fallen sharply and threatened to keep falling. This rebound is encouraging. Stability in the view on current conditions is important - how consumers are feeling here and now affects spending decisions."

Still, sentiment remains below historical averages and there are plenty of factors to keep consumers cautious, including rising unemployment, tight dairy incomes and a concerning global backdrop, he said.

The 1019 people surveyed were equally split over whether they felt better or worse off financially than a year ago, compared with a net 6 per cent who felt better off last month. A net 25 per cent expect to be better off financially in a year's time, compared with 26 per cent last month.

Their view of the economic outlook improved, with a net 2 per cent expecting good times ahead in the next 12 months, up from 12 per cent expecting bad times last month. They were more upbeat about the longer-term outlook with a net 18 per cent seeing good times over the next five years, up from 11 per cent last month.

Canterbury recorded the highest confidence reading, followed by Auckland, with Wellington the least optimistic. A net 31 per cent of respondents said it's a good time to buy a major appliance, up from 24 per cent last month.

Feeling happier

• Net 25% expect to be better off financially in a year's time.

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• Net 2% expect good times ahead in the next 12 months.

• Net 18% expect good times over the next five years.

• Net 31% say it's a good time to buy a major appliance.