NZ households taking cautious approach, survey shows

Higher petrol prices are leaving less disposable income in consumers' pockets. Photo / APN

A more cautious attitude towards spending on the part of households is evident in the latest Westpac McDermott Miller quarterly survey of consumer confidence.

The survey index fell 1.2 points from June levels to 115.4. The decline is well within the margin of error and confidence is still the second highest it has been since mid-2010.

"While consumer confidence is a touch lower than three months ago it still points to a strengthening economic recovery," Westpac chief economist Dominick Stephens said.

The net balance of respondents saying their financial situation had improved over the past year rose for the fourth quarter in a row and is now at the highest level since December 2007.

But fewer people than in the June survey consider it a good time to buy a major household item and fewer are saying they would spend, rather than save, a $10,000 cash windfall.

"Higher petrol prices may be playing a role here, by leaving less disposable income in consumers' pockets," Stephens said.

"In addition, people may have become more worried about the impact rising fixed-term mortgage rates and the Reserve Bank's recently announced lending restrictions will have on their ability to buy a house, or on the value of their house if they own one. We noted a particularly big drop in willingness to spend on big-ticket items in Auckland."

Westpac economist Felix Delbruck said there was a clear split between urban and rural areas in the latest survey, with confidence falling in the main centres but rising in rural areas.

"We think this supports the idea that concerns around housing, most relevant in Auckland, have played a role in the latest dip in confidence," he said.

"Rural confidence will also have been boosted by the end of the recent drought and the big lift in the coming season's forecast dairy payout."

Consumer confidence fell among all income groups, but particularly among those on lower incomes, Delbruck said.