Consumer confidence perks up slightly
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Consumers are slightly less pessimistic, but still struggling in the face of high living costs and yet to feel the benefit of lower interest rates.
The Westpac McDermott Miller consumer confidence index rose two points to 91.2, but remained firmly entrenched below 100, which is regarded as pessimism.
Westpac senior economist Satish Ranchhod said it has been bumpy and uncertain, and the survey reflected nervousness about the economic outlook.
"Domestically, economic conditions have remained mixed. At the same time, increased global tensions and the related volatility in financial markets are casting long shadows over the outlook."
The survey showed more households reporting their own financial position had deteriorated, but there was a lift in those expecting a future improvement.
All groups, except those on the highest incomes, were firmly pessimistic, although men were less downbeat than women, while there had been a notable fall in sentiment among young people.
Ranchhod said households were still struggling with high living costs and were yet to get the benefit of interest rate falls.
"While it will take time for those cuts to pass through to borrowers, many households will see a boost to their disposable incomes over the coming months. In some cases, the drop in their borrowing costs could be substantial, with some fixed mortgage rates down around 200 basis points compared to this time last year."
He said about a third of respondents had cut back on discretionary spending, and were still not inclined to buy a big ticket item.
The survey mirrored others showing the regions, especially those with strong agriculture production such as Bay of Plenty, Northland, Canterbury, and Southland, much more upbeat than the main centres.
"The firmness in commodity price, especially in the dairy sector, has seen a welcome lift in earnings in many communities," Ranchhod said.
"On top of that, growing numbers of international visitors will be helping to boost conditions in Queenstown and other tourism hotspots."
The Bay of Plenty was the only region of the 11 to be above the 100 confidence level.
However, Wellington's pessimism deepened to multi year lows.
"While restraint in government spending will be one reason for that weakness, it's not the only reason ... households in Wellington have faced some tough financial conditions in recent years," Ranchhod said.
He said Wellington was neither benefiting from high commodity prices nor the rise in international tourism.
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