Consumer confidence reversed last quarter's rise as the economy shows signs of slowing, the latest Westpac McDermott Miller survey shows.
The consumer confidence index fell 5.3 points to 103.8, below the long-run average of 111.2. It had risen 5.6 points to 109.1 in the December quarter.
In today's survey, the present conditions index was down 3.9 points at 107.6 while the expected conditions index fell 6.2 points to 101.3. A reading above 100 indicates optimists outnumber pessimists.
"The low level of consumer confidence is consistent with the cooling in per-capita GDP growth over the past year. It also follows a wave of negative headlines about the strength of the global economy over the summer," said Westpac Bank senior economist Satish Ranchhod.
According to Richard Miller, Mcdermott Miller managing director, the fall in confidence is widespread, led by sharp falls in the Auckland region.
"The main reason given by respondents for feeling less confident is 'costs rising faster than family incomes' and, for Aucklanders in particular, 'shortage of affordable housing,'" he said.
A net 8.3 per cent of the 1,556 people surveyed said they felt financially worse off now than they did a year ago, versus a net 4.2 per cent in the prior quarter. A net 6.5 per cent said they expect to be worse off in a year's time versus a net 0.5 per cent who had expected an improvement in the prior survey.
Households have become increasingly concerned about their personal financial situation, said Ranchhod.
"The number of households reporting that they are better off financially now compared to a year ago has been dropping steadily since mid-2017. Similarly, the number of households who expect to be better off this time next year has fallen to its lowest level since 2008, when the initial impacts of the Global Financial Crisis were just starting to be felt," he said.
Households are also more negative about the wider economy. A net 5.1 per cent anticipate a worse outlook over the coming year compared with a net 4 per cent expecting an improvement in the prior quarter. A net 15.4 per cent are optimistic about the five-year horizon versus 18.1 per cent in the prior quarter.
Those surveyed were slightly less willing to make 'big ticket' purchases, with a net 23.4 per cent of people saying now is a good time to buy, compared to 27.3 per cent in the prior quarter.
Ranchhod said spending appetites have been largely resilient, which likely reflects the low level of interest rates. When asked what they would do with a $10,000 windfall, the proportion of households who said they would use it to pay down debt has fallen to its lowest level in 20 years. "This suggests that the drop in confidence may not fully translate to weaker consumer spending," he said.