New Zealand households remain downbeat with consumer confidence dipping in June and remaining at below average levels, the latest Westpac McDermott Miller survey shows.
The consumer confidence index fell 0.3 points to 103.5 in the June quarter, below the long-run average of 111.2. It had fallen 5.3 points to 103.8 in the March quarter.
In today's survey, the present conditions index was down 1 point at 106.6 while the expected conditions index inched up 0.1 of a point to 101.4. A reading above 100 indicates optimists outnumber pessimists.
"The continued slide in household confidence follows a more general cooling in the economy over the past year, and households are feeling it. In fact, in annual terms, per-capita GDP growth has now fallen to its slowest pace since 2011, and it effectively stalled through the back half of last year," said economist Satish Ranchhod.
A net 4.7 per cent of the 1,556 people surveyed said they felt financially worse off now than they did a year ago, versus a net 8.3 per cent that felt that way in the prior quarter. A net 3.2 per cent said they expect to be worse off in a year's time versus a net 6.5 per cent in the prior survey.
A net 4.6 per cent anticipate a worse outlook for the wider economy over the coming year compared with a net 5.1 per cent in the prior quarter. A net 11.9 per cent are optimistic about the five-year economic horizon versus 15.4 per cent in the prior quarter.
According to Ranchhod, households' confidence about the economic outlook has been trending down for around 18 months and is now weighing on spending appetites.
The number of households who think now is a good time to purchase a major item has fallen to a two-year low at a net 17.9 per cent, compared to 23.4 per cent in the prior quarter.
The survey did signal some differences in confidence across age groups. Those aged under 30 are feeling much more upbeat about the economic outlook with confidence in this age group at a five year high. Those aged over 50 were noticeably less confident than other groups and are particularly concerned about the economy's direction over the coming year.
Richard Miller, managing director of McDermott Miller, said "reassuringly but perhaps unsurprisingly, young consumers (18-29 years) seem to have been inspired by the political change of direction. Their optimism lifted strongly by 12.6 points to 129.1 on the consumer confidence index.
"In contrast, consumers over 50 years of age, who are some of the biggest spenders, lost confidence, down 3.9 points to 99.6 on the consumer confidence index."
Ranchhod said developments in the housing market were likely a big part of the reason for the divergence across age groups. The past year has seen a marked slowdown in house sales and price growth. There have also been a number of regulatory changes affecting the property market, as well as nervousness around the proposed capital gains tax.
He said older New Zealanders - more likely to be homeowners or property investors - are more jittery. For younger people - who are trying to get their foot on the property ladders - the slowdown and low-interest rates mean homeownership appears more affordable.
Survey interviews were conducted over the period June 1-10, 2019 and the margin of error is 2.5 per cent.