The ANZ-Roy Morgan Consumer Confidence Index fell again in August, to its lowest level in 10 months.
The overall index slipped three points to 92, a notable feature being that the proportion of households thinking it’s a good time to buy a major household item - the best retail indicator - fell four points to -12.
"The retail sales data for Q2 (released on Monday this week) surprised to the upside, but the consumer survey data suggests that in the bigger picture, the retail sector will continue to find the going tough for now," ANZ economists say.
Perceptions of current personal financial situations fell a further three points to -24%, the weakest level since October 2023.
And perceptions regarding the economic outlook over the next 12 months fell four points to -20%. The 5-year-ahead measure also fell 4 points, to +3.
House price inflation expectations were steady at 3.5%, while two-year-ahead CPI inflation expectations eased from 5.1% to 4.8%.
ANZ economists say consumers are facing a raft of headwinds, among them falling employment, declining wage growth, the impacts of inflation on necessities, low population growth and falling real house prices.
"That’s a lot, and it’s been outweighing the positive impetus from falling real interest rates."
The good news is that the Reserve Bank has pivoted to being more focused on medium-term downside risks of inflation, rather than near-term upside risks.
"The upshot is, barring any unwelcome upward surprises to inflation, the RBNZ will do whatever is needed with the Official Cash Rate to ensure this economy gets back on its feet.
"It won’t happen overnight, but it will happen."
10 Comments
Selling women’s shampoo.
Perhaps this is wise given the quality of recent house price forecasts
Private sector credit growth in NZ has peaked. Households do not have sufficient income to take an additional debt. We have one of the highest income to debt rations in the OECD.
As of early 2025, New Zealand households owed approximately 170% of their gross income. Households will need to deleverage and/or save before they are in a position to spend again.
High Kiwi Saver withdrawals are also indicative of collapsing spending power and a contracting economy.
Any recovery will be very tepid on the private side …. It’s like the end of a super debt cycle
The economic lemon has been fully squeezed, all that's left, is a sun wizzened husk.
Plenty of people are cashed up and ready to spend, it probably just takes a change of sentiment, most likely due to reduced interest rates. I wouldn’t write off a reasonable recovery next year, but it’s by no means guaranteed.
I think you're correct - some people have been saving and deleveraging already for some time. This is reflected in the data. But others have not and are also dissaving - drawing down savings.
At the aggregate NZ households are well in over their heads on debt but within that are lots of people who are doing well. We'll have to wait for next year to see how the economy performs.
I just bought a load of clothes.... from the clearance rack at MacPac. Sorted for another year.
Come on, please help out the economy and pay the full inflated price.
A further 20% off clearance price worked just fine. Besides I'm doing a service clearing shelf space. Very community minded.
Quite happy actually, my fav ever hoodie was a Macpac merino one. I wore it to shreds and never found another decent one at any price. I would have paid full retail but will happily take the end of season price.
ANZ economists say consumers are facing a raft of headwinds, among them falling employment, declining wage growth, the impacts of inflation on necessities, low population growth and falling real house prices.
And yet, Westpac continues to predict 2.4% economic growth this year.
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