Consumer Confidence Has Continued To Drop As The Pressure On Households’ Finances Has Mounted

Westpac McDermott Miller Consumer Confidence, March quarter 2022

Consumer confidence has continued to drop and is now at its lowest level since the 2008 Global Financial Crisis. The Westpac McDermott Miller Consumer Confidence Index fell 7 points in March to a level of 92.1. 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.

“New Zealand is being buffeted by a range of powerful economic headwinds,” said Westpac’s Acting Chief Economist Michael Gordon. “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 the months ahead.”

“One of the biggest concerns for New Zealand households has been the rapid rise in the prices of many household goods, which has far outpaced the growth in wages,” Noted Mr Gordon. “In particular, increases in the prices of food and fuel have syphoned a large amount out of households wallets, and that is squeezing spending in other areas.”

“Confidence is low in all parts of the country, and households are nervous about the outlook for the coming year” commented Mr Gordon. “As well as the rise in consumer prices, higher borrowing costs have taken a bite out of many households’ disposable incomes. The rapid spread of Omicron will also be worrying many households.”

“Looking across the different demographic groups, there are some clear contrasts. Men’s confidence is close to that of last quarter at 99.9 points, while women are considerably more pessimistic about their own financial circumstances as well as the economic prosperity of the country as a whole (down 14.7 points to 84.7). Women are likely to be feeling the squeeze on household finances with rising prices and the threat of more to come as the repercussions of sanctions on Russia continue to ripple out around the world,” suggested Imogen Rendall, Market Research Director of McDermott Miller Limited.

“Confidence of younger people aged 18-29 has fallen below 100 for the first time since the beginning of the pandemic with a large drop of 15.2 points to 91.9. Increasing living costs, a squeeze on disposable income and rising borrowing costs must make the prospect of buying a home seem that much more difficult for those in this age group. While confidence of those aged 30 to 49 remains unchanged since last quarter at 103.2, confidence of those aged 50 plus has been declining over the past year and this quarter dropped sharply by a further 11.7 points, down to 82.8. Not only do a greater proportion in this age group report that they are worse off financially compared to a year ago, a considerable number expect to be worse off this time next year. For those on fixed incomes, this prospect must be daunting,” noted Ms Rendall.

A full description of the background and specifications of the survey are attached. The survey was conducted over 1-17 March 2022, with a sample size of 1,559. 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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