Westpac McDermott Miller Consumer Confidence, December Quarter 2021

The Westpac McDermott Miller Consumer Confidence Index took another step down in December, dropping 3.6 points to a level of 99.1. An index number below 100 indicates that there are more New Zealanders who are pessimistic about the economic environment than there are those who are optimistic.

“It’s been a stressful year for a lot of New Zealand households,” said Westpac Senior Economist Satish Ranchhod. “With the combination of lockdowns, rising interest rates and now a new Covid variant, it’s no surprise that confidence has taken a tumble in recent months.”

“Many households have reported that their financial position has deteriorated over the past year, and a growing number expect their finances will come under pressure over 2022,” noted Mr Ranchhod. “Higher borrowing costs have already taken a bite out of many households’ disposable incomes, and many more will face re-fixing at higher interest rates over the coming year. A large number of households will also have found their purchasing power squeezed by the rapid rise in consumer prices, which in many cases will have outpaced the growth in wages.”

“Other parts of the country have clearly been missing Aucklanders over the past few months,” commented Mr Ranchhod. “Confidence is at low levels in every part of the country, and there have been sharp falls in tourist hot spots like Queenstown, Nelson and the Bay of Plenty. The combination of social distancing requirements and a lack of tourists from Auckland has been a significant drag on spending in those regions.”

“The Christmas feelgood factor that often sees a jump in consumer confidence is missing this year. Fieldwork began just as news of a worrying new variant was being reported internationally. With New Zealand not yet out of the woods with Delta, the potential implications of Omicron breaching fortress New Zealand and spreading out into the community seem to have been firmly in respondents’ minds as they completed the survey this quarter,” suggested Imogen Rendall, Market Research Director of McDermott Miller Limited.

“Confidence has been dented across all income groups this quarter. Those in the lowest income group (less than $30,000 per annum), have seen the biggest drop in confidence of 4.6 points and now have an index score of 86.6. This group has seen their personal finances worsen and many were concerned that their finances would continue to deteriorate over the coming year. In contrast, those with a household income greater than $100,000 are still securely optimistic, but they too have seen a drop in confidence (down 3.7 points to 111.3). Concerns in this group centred around both the short and long-term economic security of the country,” noted Ms Rendall.

A full description of the background and specifications of the survey are attached. The survey was conducted over 1-12 December 2021, with a sample size of 1,558. 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. Graphs supplied may be reproduced by the news media provided the Westpac McDermott Miller logo remains inset.

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