Global Storm Clouds And Ongoing Cost-Of-Living Pressures Dampening Consumer Confidence

Westpac-McDermott Miller Consumer Confidence, March quarter 2025

It’s been a rocky start to the year and household confidence levels have taken a knock. The Westpac-McDermott Miller Consumer Confidence Index fell 8 points in March to a level of 89.2.

“March’s fall in consumer confidence comes at the same time as there’s been growing nervousness about the global backdrop,” said Westpac Senior Economist Satish Ranchhod. “The past few weeks have seen increased trade tensions and related volatility in financial markets. That’s casting a shadow over the economic outlook and adding to uncertainty for New Zealand households.”

“Financial pressures also continue to be a big concern for many households,” noted Mr Ranchhod. “While inflation is now finally back close to 2%, many of us are still grappling with the big increases in living costs over the past few years that have eaten away at our spending power. Furthermore, we’re still seeing large increases in the cost of essentials like food and local council rates. In the face of that ongoing squeeze on their spending power, it’s no surprise that many households still feel like they’re going backwards.”

“Despite the recent drop, household confidence levels have been trending higher over the past year,” commented Mr Ranchhod. “Since mid-2024 there have been some big drops in interest rates. That signals a boost to many households’ disposable incomes over the coming months, and it will support a gradual recovery in economic growth and the labour market over 2025. However, the key word here is ‘gradual.’ As this recent fall in economic confidence highlights, there are a range of concerns that are still worrying New Zealand households, and that’s likely to constrain spending for a few more months at least.”

“The level of confidence continues to vary significantly among regions,” noted Mr Ranchhod. “Confidence is in the doldrums in Wellington, with financial headwinds and a tightening-up of public spending key concerns for many households. In contrast, households are more optimistic in regions that have a strong rural backbone or tourism ties, especially in the lower South Island.”

“The level of pessimism has increased across all demographic groups. Men’s confidence has dropped considerably this quarter by 11.3 points to an index score of 97.3. Confidence amongst women has also dropped, and they remain much more pessimistic at 81.4, a drop of 5.8 points. Both groups are concerned about New Zealand’s economic outlook, with only two in ten men and fewer than one in ten women expecting good economic times in New Zealand over the next year,” said Imogen Rendall, Market Research Director of McDermott Miller Limited.

“All age groups have seen a drop in confidence this quarter. Confidence amongst those aged 30-49 has fallen the most, sinking 16.8 points to 86.5. Younger people aged 18-29 remain the most confident with an index score of 100.5 (a drop of 5.7 points from last quarter) and those aged 50+ have also seen a reduction in confidence of 3.2 points to 85.7,” noted Ms Rendall.

“Looking at those in paid work, confidence has dropped by 13 points this quarter down to 91.8, while those not in paid work saw almost no change from last quarter (up just 0.3 points to 85). Two in five of those in paid work feel they are worse off financially than a year ago, while almost half of those who are not in paid work feel this way,” commented Ms Rendall.

A full description of the background and specifications of the survey are attached. The survey was conducted over 1-12 March 2025, with a sample size of 1,550. An index number over 100 indicates that optimists outnumber pessimists. The margin of error of the survey is 2.5%.

Acknowledgement

The Westpac-McDermott Miller Consumer Confidence Survey and Index is owned by McDermott Miller Limited. Westpac-McDermott Miller should be acknowledged as the source when citing the Index.

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