Results and language of June quarterly survey on economic confidence just a snapshot

Consumer confidence survey results on their own don't answer questions about who is banking on a more positive outlook or why. Photo / Getty Images

Fewer Northlanders expect their region's economy to strengthen over the coming year, or so says a June quarterly survey comparing results with a March survey.

Only 9 per cent of the handful of Northland households surveyed in June expect the local economy to grow, according to the Westpac-McDermott Miller Regional Economic Confidence (Consumer Confidence Index) survey for the 2019 quarter, taken between June 1-10. That is down on the net 20 per cent rise in confidence Northland ''households'' posted for the quarter ending in March 2019.

Down at the other end of the country, a growing per centage of Otago householders feel more positive: 45 per cent, up from 40 per cent in March. Seven of 11 regions posted a decline, with Bay of Plenty, Gisborne/Hawkes' Bay and Wellington — previous high scorers — experiencing the sharpest falls in confidence in that month.

How worried should we be, if at all? Am I wrong in thinking it all means little as far as how the economy is actually performing? The subjective survey measures people's perceptions, their ''feelings'' about economic confidence, based largely on ''what's in my pocket/bank/credit card/wishlist right now?''

The report doesn't explain participants' spending ability during the 10-day snapshot, or how that affected their view. It doesn't explain what led to their loss or gain of economic confidence. It isn't presented alongside economic indicators or measurements.

Yet it has influence. Nearly every mainstream media in New Zealand repeated the survey findings, many taking their tone from the press release itself, the heading of which was: ''Confidence in Northland's economic future ratchets lower''.

"Ratchet" implies something being screwed down lower and lower, tightened, ground down — but in reality the confidence levels are still in the positive zone.

Another line taken from media coverage: ''Otago households have the highest economic confidence in the country, despite a national groundswell of dissatisfaction with the economy at present.''

Is it really a national groundswell of dissatisfaction?

"Household confidence in Northland is now second lowest in the country," said Westpac chief economist Dominick Stephens in the report.

"Confidence is likely to have been affected by slowing house prices, weakening construction activity and softer labour market conditions. Sluggish tourism activity in the region is unlikely to have helped matters.''

On the other hand, Stephens said the reason for Otago's slightly better outlook was ''likely'' to be seen in a big pickup in the construction, agricultural and horticultural sectors and low unemployment.

Unlikely, likely?

I asked Vaughan Cooper, acting chief executive at Northland Inc, if I was completely off track in questioning the report. Apparently not.

''How much notice should we take of a consumer confidence survey with a total New Zealand-wide sample size of 1500, undertaken as we move into the winter months in Northland?'' Cooper said.

Vaughan Cooper, acting chief executive at Northland Inc. Photo / File

''We know there is a slowdown in tourism during the winter; we know there is a slowdown in the construction sector during winter; we also know people generally feel less confident in this period – that is human nature."

Looking at the labour market conditions over a longer period, "the region is doing remarkably well at the moment", he said.

The survey report signalled differences across age groups, with under-30s feeling more upbeat about the economic outlook, returning a five-year high for the age group. Those over 50 were noticeably less confident than other groups, and consumers with household incomes of $30,000 to $50,000 showed the highest level of confidence.

Naturally, different generations have different expectations. The over-50s might be facing a longer period until retirement and a less certain superannuation system, they might be worried about their own children's future. The latter could be signalling confidence in the Government's emphasis on improving the lot of lower income households.

Despite the tone of the headings and language used to share what some might consider fairly hypothetical news anyway, in the end it's not bad news at all.

As Stephens, the person fronting the issue, said: ''The fall was not particularly large, and speaks to more of a general malaise among households rather than specific worries or events.''

• The Consumer Confidence Index is calculated from percentage response to five internationally standardised questions covering consumers' personal financial circumstances, national economic expectations and attitudes to major purchases.