Consumer confidence down but a good time to buy

Consumer confidence fell four points in September to 114, the lowest read in four years, but households thinking it’s a good time to buy a major item like a vehicle lifted two points to 41%.

That’s according to the September 27 ANZ-Roy Morgan Consumer Confidence Index, which says the result indicates wariness of the future.

The Current Conditions Index fell one point to 126, while the Future Conditions Index fell six points to 106.

Consumers’ perceptions of their current financial situation fell five points to a net 11% feeling financially better off than a year ago.

A net 23% of consumers expect to be better off financially this time next year, down four points on the previous month.

However, a net 41% think it’s a good time to buy a major household item – up two.

Perceptions regarding the next year’s economic outlook fell a sharp nine points to a net 10% expecting conditions to worsen, the lowest in four years.

The five-year outlook fell seven points to plus 4%.

Confidence fell in every region, with sharp falls in Wellington (down 10) and Canterbury (down six) leading the drop, Wellington nonetheless remaining the most optimistic region.

House price inflation expectations are now weakest in Auckland (2.0%, down 0.7% pts) and strongest in Wellington (3.8%, up 0.2% pts).

General inflation expectations remain in recent ranges at 3.5%.

Consumer confidence was below its historical average of 120 and the lowest read in four years. Confidence in both current and future conditions fell, but consumers are particularly wary about what the future may bring.

However, households are still feeling pretty robust. Lower interest rates are likely behind

the robustness in the proportion of people thinking it is a good time to buy a

major household item. The tight labour market is another key support, though

employment indicators have deteriorated markedly, so this is a vulnerability

going forward, the report says.

The expectation is that slippage in economic growth is set to continue over the second half of the year as the economy battles headwinds, but the fundamentals for the New Zealand economy remain decent.