Consumer confidence is continuing to climb out of a hole, and is back up to similar levels seen before the Middle East conflict began in February.
The latest ANZ-Roy Morgan NZ Consumer Confidence Survey shows consumer confidence rose to 99.3 in July, up 8 points from 91.3 in June.
ANZ economists Sharon Zollner and Matt Dilly said while consumer confidence in July was still 8 points below its January peak – before the Middle East conflict began – it was 19 points off its April low.
“A sharp bounce in consumer confidence this month is very welcome, but it was unsurprising to see confidence ease again late in the month,” they said.
The future conditions index, which is made up of forward-looking questions, jumped up 9.8 points to 106.5. It’s the first time this index has passed the 100 mark since February.
The current conditions index also improved, lifting 5.3 points to 88.5.
The ANZ-Roy Morgan NZ Consumer Confidence Survey measures the results of a set of five questions asked monthly of a random phone sample of over 1,000 people.
In the July survey, perceptions regarding the economic outlook over the next 12 months lifted from -23% to -13%, its strongest read since February.
The five-year-ahead measure rose 9 points to 12%, its strongest reading since the beginning of the year.
Two-year-ahead inflation expectations were flat at 4.6% in the July survey. Inflation expectations are currently at the same levels they were at before the Middle East conflict began in February.
Perceptions of current personal financial situations “improved markedly” from -23% to -16% in the July survey. This is the strongest result since March.
Looking forward, a net 10% of respondents expect to be better off this time next year, up 11 points and the strongest reading since January.
The proportion of households who think it’s a good time to buy a major household item edged down 4 points to -7, which remains subdued.
“Developments in the Middle East will continue to buffet both business and consumer confidence as long as the situation remains volatile,” Zollner and Dilly said.
“The question for retailers is whether people adapt to the uncertainty and to some extent lose interest, or whether it will cause a persistent hit to spending above and beyond the cashflow impact of more expensive fuel prices. It’s a case of ‘watch this space’."
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