Consumer confidence fell for the second straight month and is now at its lowest level since last September, according to the latest ANZ-Roy Morgan Consumer Confidence survey.
The survey fell 6 points in July. And although the overall level of household sentiment remains positive at 115.6, it's now below the survey's historical average of 119.6.
The biggest drop in positive responses to the survey's five component questions was in the one on the outlook for the New Zealand economy in a year’s time. Only a net 3% of respondents expected better times next year, down 15 points from June. This is the biggest month-on-month fall since October 2008, right after the collapse of Lehman Brothers, which heralded the start of the Global Financial Crisis.
"While we do not think recent global concerns will have anywhere near the same effect this time, consumers are clearly getting worried," ANZ economist Khoon Goh and Roy Morgan's Mark Dansey said.
"Despite the economy (being) out of recession for well over a year now, consumers are still feeling the recessionary effects on their own finances."
The economists said although it was unclear what extent recent global market volatility had played in this month’s survey fall, ongoing sluggishness in the housing market, with house prices still under downward pressure, was "no doubt" weighing.
"And price increases for electricity and petrol as the emissions trading scheme came into effect from July 1 could also have been a factor behind consumers feeling less confident."
That said, there were some positives including an improving labour market, falls in longer term fixed mortgage rates, and the October 1 tax cuts around the corner.
"But it seems the negatives are outweighing the positives in the consumers’ minds at present."
Notably the June increase in the number of survey respondents thinking it was a good time to buy a major household item reversed this month.
"We wondered if last month’s reading was influence by a 'beat the GST increase' dynamic. The pullback this month suggests there may be some of that at play. While the current reading at +22 is still consistent with a pick-up in retail spending in the months ahead, it is not pointing to a big spending surge that the retail sector had been hoping for."
GST will be increased to 15% from 12.5% on October 1.
A total of 1,062 people were interview for July's survey.