Consumer confidence flat in April

ANZ Roy Morgan survey finds consumer confidence stuck at March's downbeat levels in April; Auckland faring better; House prices seen rising 2.4%

21st Apr 11, 1:20pm by Bernard Hickey

The ANZ Roy Morgan survey for April found consumer confidence unchanged in April at March's lower levels in the wake of the Christchurch earthquake. Consumers' inflation expectations rose slightly and their expectations for house price growth rose to 2.4% a year on average over the next two years from 2.0% in March. See the ANZ Roy Morgan consumer confidence survey release below:

The results of this month’s ANZ-Roy Morgan consumer confidence survey are a virtual repeat of March’s. Headline confidence was unchanged at 101.4.

The Current Conditions index eased marginally, from 94.1 in March to 93.5 in April. The future conditions component lifted a whisker, from 106.4 to 106.6.

Looking at the five components that make up the overall measure of consumer confidence, perceptions towards households’ current financial position eased from -16 to -21. The proportion of households expecting to be better off twelve months out remains higher than those expecting to be worse off, but the net balance has eased from +21 to +18.

Perception towards the general economy is marginally less negative, going from -28 to -24. The five-year outlook remains unchanged at +26. Views on whether it is a good or bad time to buy a major household item lifted from +4 to +8.

Seasonal influences can play a role from month to month, but a quick check on these reveals nothing startling, with seasonally adjusted readings essentially the same as March.

Households remain cautious towards spending and how they perceive the economy is evolving, though more upbeat than the dark days of 2008.

Low levels of confidence – and particularly low readings for current conditions, which is the key bellwether for spending – continue to rule the consumer out as a key driver of an economic recovery.

Looking at the detail reveals little change across the sexes, with males more optimistic (with an index of 107.7) about the economy than females (95.4). Respondents aged between 25 and 49 showed an increase in sentiment, while those over 50 and under 18 years of age recorded a drop in confidence.

The respondents aged between 25 and 49 years old recorded rises in both current and future confidence measures.

The Auckland region recorded the highest level of consumer confidence, overtaking Wellington. Canterbury also recorded a rise in confidence while the rest of the South Island reported a weakening in sentiment.

General inflation expectations lifted a tad, and so too did house price expectations. Households expect general inflation to average 4.1 percent per annum over the next two years (up from 4.0 percent in March). Household inflation expectations have generally wobbled around 4 percent since the start of the year.

While such measures are generally a poor bellwether for inflation itself, they do provide some value in terms of wage bargaining expectations, an area we will watch with interest given the spike in headline inflation to 4.5 percent.

House prices are expected to rise 2.4 percent per year on average over the next 2 years, up from March’s 2.0 percent. Expectations for house price growth were the highest in Canterbury, at 3.7 percent per annum over the next two years. At the other end of the scale, Wellingtonians are only expecting house prices to lift 1.0 percent over the same period.

Consumer confidence

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Source: ANZ Roy Morgan

Source: McDermott Miller

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27 Comments

by mandk | 21st Apr 11, 1:54pm 1303350886

"House prices are expected to rise 2.4% per year ..."

Although this finding (like the rest of them) might be dismissed as having little real value, it would at least be possible to test whether past findings about house price expectations have been any guide to actual outcomes.

Bernard, can you throw any light on this?

by Wolly | 21st Apr 11, 2:02pm 1303351374

If an asteroid the size of lake Taupo were about to impact NZ at 50oookm an hour inside of 6months, the same BS would point to house prices rising and the usual blather. It is a total waste of bloody time even reading that crap.

by Nicholas Arrand | 21st Apr 11, 2:17pm 1303352221

It is, Wolly! And though my Dick Smith telescope dx 5037.02 I can just make out the wording on the south side...it seems to say...."B...U...D...g...e...t..2011 ".

by Your Landlord | 21st Apr 11, 2:19pm 1303352391

Sometimes seems like the only place one can find people saying house prices won't rise is here, at good old interest.co.nz!

PS: By the way, I happen to think house prices will rise.

by steven | 21st Apr 11, 2:33pm 1303353180

Well guess what, spend the next year watching....CPI is 4.5% lets see if houses go up by 4.5% or more....if you are lucky you will only see a drop of 5% in real terms this year...so allow for infaltion and thats 10% loss in one year.

regards

by Kermit The Frog | 21st Apr 11, 3:24pm 1303356275

Sold your house yet Steven ?

by steven | 21st Apr 11, 3:33pm 1303356789

I have no financial need to sell my home...

regards

by Kermit The Frog | 21st Apr 11, 3:49pm 1303357797

But its going to be worth 10% less within a year......why would you keep it ?

by SK | 21st Apr 11, 4:15pm 1303359301

What do you know about this house?

by steven | 21st Apr 11, 5:46pm 1303364802

I know its hard to believe, but not everyone is a scrooge and only thinks in terms of $. I wont sell because its our home, so as such it has no monetery value for me. If I were to bother, well its simple its worth way more today than I paid for it many years aso...anyway a 10% loss on something I cant cash in anyway is no loss in my book.

regards

by We Are Stuffed | 21st Apr 11, 3:16pm 1303355782

I can just imagine how overpriced your houses are going to be if you ever list them on the market.

by SK | 21st Apr 11, 3:43pm 1303357390

Inflation also errodes fixed price debt.

Is this news to you?

by Nicholas Arrand | 21st Apr 11, 4:16pm 1303359373

"Inflation" does not erode fixed price debt. It remains nominally the same. Only an increase in disposable income can erode fixed priced debt. ie: if inflation goes to 20% but incomes do not increase, then available disposable income (to service all other expenditure) falls - there is less left over to service the fixed price debt! And then....and here's the good bit...when the fixed price duration has run its term, that debt is re-priced at market. And if inflation is running at 20%, then interest rates will have matched that rise, even in the face of political prsssure to do otherwise. So then we have ~ a fixed nominal debt ~ being serviced by less disposable income ~ at a higher interest rate! Fabulous.....

by steven | 21st Apr 11, 6:10pm 1303366214

and deflation where this leads to a depression and loss of jobs and/or salary cuts also mean debt can become un-servicable....In effect the NZ Govn is seeing that in its early stages now, their tax take is collapsing but their debt is even worse than static, its increasing...so its harder to service with each passing year in a double whammy, there is more and less tax income to pay for it. so I cant see how we can not have tax increases in the [close] future.

Interesting that they have gone for such large borrowing sums up front, they must think the EU's problems are very close to boil over....otherwise its costing them to hold money they dont need yet....what do they [think they] know that we dont.

If wages do not increase for that 20% then something else has to be not bought, which means those areas suffer 20% deflation....it has to balance.

regards

by steven | 21st Apr 11, 9:09pm 1303376959

lets say we accept that calculation, since the most likely scenario facing us now is a depression and deflation, in effect with your calculation it multiples debt......the next most likely is stag-flation, in this scenario your house(s) no longer appreciate, and you lose against inflation or do a Japan and lose value slowly, say 2 to 5% per year....and since some (many?) PIs l are geared to get tax credits and have little net positive income thats ugly as well.

Personally I rate a depression worse than 50/50....

regards

by SK | 21st Apr 11, 4:15pm 1303359358

Inflation increases prices across the board including wages.

by Nicholas Arrand | 21st Apr 11, 4:21pm 1303359692

Not when unemployment is rising. That's what's different 'this time'. People who loose their jobs will compete for any opening at lower wages; they have to, just to get any income. When your tenants lose their jobs, what will they pay you rent with? You can give them notice, but what it there are no takers for your vacancy at your asking price? You'll lower you rents accordingly, just to get that income. Same applies to anyone who losses their job in this market.

by steven | 21st Apr 11, 9:17pm 1303377455

I just cant believe some ppl......

We dont have a "standard" or "pull" Inflation situation. In the past we have had wages increases pulling up prices, which you are describing, but right now we have "the is cart before the horse" that is push inflation where rising inputs of materials costs push up prices where they can be pushed up.....but it gets worse,

Inflation is up in some goods, but down in others to compensate but with higher un-employment wages are not increasing.....So sure CPI is 4.5%, have houses gone up 4.5%? no in most of NZ if not all they have not. Core inflation is around 1 to 2%, have houses gone up 1 to 2%, uh no....

Great to see you are positioned to take advantage of ....um......whatever you think is going to happen.....

Me Im in cash and staying in it.

regards

by SK | 21st Apr 11, 4:21pm 1303359664

It's not rising - look at the trademe/seek job stats.

Skills shortages already evident in some industries.

by Nicholas Arrand | 21st Apr 11, 4:26pm 1303359964

SK. We have unemployment here at 6.7%... and tipped to rise. We have immigration to Aussie of our finest and best; we have job losses on a massive scale coming out of Christchurch and we have a dollar at US$0.80 destroying our tourism sector...and its jobs. Where ever you see that 'employment' it's sectorial, small and likely to be fleeting.

by Matt in Auck | 21st Apr 11, 6:27pm 1303367234

Just another bank economist's report to throw in the bin!

Did you see the front page story of the Herald today, some wanker from Goldman Sacks reckons Auckland is going to have a barnstorming year, 3.5% growth!

I don't know what bloody planet he's from

He seemed to be talking up the rise in house prices in Akld as somehow miraculously lifting Akld's economy

Absolute load of bullshit!

by SK | 21st Apr 11, 4:26pm 1303359970

All the missing truck drivers and people who dig holes for a living.

People always come and go - this is nothing new.

Boring!

The upswing is coming - I'm positioned.

by Nicholas Arrand | 21st Apr 11, 4:32pm 1303360341

Funny. So am I. And it sure isn't going to be property. That was last years/decades game.

by Anarkist | 21st Apr 11, 5:27pm 1303363666

Perhaps an article written by Alan Greenspan in the Financial Times, explains the true reasons behind moves by John Key to promote the development of a "financial hub" in New Zealand. In effect it would allow banks now registered in the United States to shift registry to New Zealand in order to avoid being subject to the more stringent financial regulations, such as U.S. corporations did in order to elude the Sarbanes-Oxley Act.

“The US regulatory agencies will in the coming months be bedevilled by unanticipated adverse outcomes,” he warns, “as they translate the Dodd-Frank Act’s broad set of principles into a couple of hundred detailed regulations.” The Act “may create … regulatory-induced market distortion,” because neither lawmakers nor “most regulators” understand how “complex” the financial system is.

Mr. Greenspan argues that if banks are regulated to reduce the risk they pose to the economy, they may pack up and take their dealings to London: “concerns are growing that without immediate exemption from Dodd-Frank, a significant proportion of the foreign exchange derivatives market would leave the US.”

http://michael-hudson.com/2011/04/greenspan-returns-to-de-regulation/

by steven | 21st Apr 11, 5:41pm 1303364482

I think Greenspan has it wrong but as a Libertariain failure Im not suprised....London, no he's well on the face of it he's senile if he thinks that. Several major banks in the UK (HSBC, Barclays maybe) want to leave the UK because there will probably be real regulation unlike the US where its a possible risk at most. So they are considring Hong Kong, which lets face it is ruled by Communist China, what a bright move that would be, not. What could happen in the USA is criminal proceedings following up the civil ones which moving wouldnt dodge....but Im not aware that the UK is in line for criminal problems at least on the scale of the US.

regards

by muzza | 21st Apr 11, 6:06pm 1303366003

Actually Wolly, people's expectations can be relevant as they often make decisions based on their expectations. You expect /hope house prices to crash, so you don't buy. Obviously others who expect prices to increase (and are needing/wanting to purchase a place) will buy if that's their expectation.

by Wolly | 21st Apr 11, 7:27pm 1303370845

Yes muzza and them that benefit from what other do will bust a gut to generate the required expectations...most have no idea what it was that encouraged them to borrow stonking amounts of dosh to pay bloated prices for pine boxes back in circa 07. So we continue to get this garbage spewing out like a sewage outlet.