The Winter Blues – Consumer Confidence Drops To Low Levels.

The Westpac McDermott Miller Consumer Confidence Index fell 11 points in June to a level of 82.2. That fall erased the gains seen over the past six months and leaves confidence about the economic outlook only modestly above historic lows. (Note: A consumer confidence level below 100 signals that the number of New Zealand households who are pessimistic about the economic landscape outweighs those who are optimistic.)

“New Zealand households are continuing to be buffeted by strong financial headwinds,” said Westpac Senior Economist Satish Ranchhod. “Recent months have seen hopes for an early reduction in interest rates reduce as inflation has held up. Ongoing high borrowing costs, combined with a more uncertain labour market is undermining consumer confidence. Against that backdrop, 42% of households told us their financial position has deteriorated over the past year, while just 14% said it had improved.”

“Lingering inflation pressures have poured cold water on the chances of near-term rate reductions from the RBNZ,” noted Mr Ranchhod. “Cuts in the Official Cash Rate are likely to be a 2025 story. That will have been a disappointment to those households who had been hoping for near term relief on their borrowing costs.”

“With pressures on their finances and nervousness about where the economy is heading, households are keeping their wallets shut,” said Mr Ranchhod. “Even with strong population growth, retail spending levels have been falling in recent months, with households switching away from ‘nice to haves’ and towards value-for-money”.

“There is a strong feeling of pessimism across all demographic groups. Men’s confidence has dropped considerably this quarter by 12.6 points to an index score of 89.1. Confidence amongst women has also dropped, and they remain much more pessimistic at 75.4, a drop of 9.3 points. Almost half of women see themselves as worse off financially than they were a year ago, compared with just under a third of men. Looking ahead to next year, both men and women have similar expectations for their personal finances, with around a quarter expecting to be worse off. Women are especially downbeat about New Zealand’s economic outlook, with almost half expecting bad times over the year ahead. This compares with around a third of men who are expecting bad times in New Zealand,” said Imogen Rendall, Market Research Director of McDermott Miller Limited.

“Looking at those in paid work, confidence has dropped by 14.3 points this quarter down to 83.6, while those not in paid work also saw a drop of 6.5 points down to 79.4. 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,” noted Ms Rendall.

A full description of the background and specifications of the survey are attached. The survey was conducted over 1-12 June 2024, with a sample size of 1,553. 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 Index is owned by McDermott Miller Limited. Westpac McDermott Miller should be acknowledged as the source when citing the Consumer Confidence Survey and Index. Graphs supplied may be reproduced by the news media provided Westpac McDermott Miller is acknowledged as the source.

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