Consumer sentiment has rebounded from record lows but remains at levels seen during the global financial crisis.
The Westpac McDermott Mill Consumer Confidence Index rose 8.9 points to 87.6 for the three months ended September, reaching the level of sentiment during the global financial crisis.
Numbers above 100 indicate optimism, numbers below 100 indicate pessimism. The long-term average of the index was 110.
Satish Ranchikhod, senior economist at Westpac, said the higher headline results were likely due to the easing of coronavirus-related restrictions and better-than-expected economic growth. .
“Nevertheless, confidence is still at a very low level.
“Household budgets are being squeezed by rising costs of living and higher mortgage rates.”
The pressure on households is particularly pronounced for low-income earners, Lanchihod said.
A net 13.3% of people think it’s a bad time to buy major household items, an improvement of nearly 12 points from the last survey.
The number of people who said they were financially worse off, and the percentage of respondents who expected it to get worse within a year also decreased.
Looking ahead, Ranchhod said pressure on household budgets is likely to increase.
“The Reserve Bank has rapidly increased the official cash rate, with a further significant increase due by the end of this year.
We expect further softening in the coming months, especially in areas such as consumer durables.”
Consumer confidence was low across almost all age groups, with the exception of 18- to 29-year-olds, who had recovered to pre-pandemic levels.
The strength of the labor market has benefited this cohort the most, Ranchhod said.
“In general, younger workers change jobs more frequently. With the labor market at its tightest in decades, many workers in the early stages of their careers find their skills in demand. You will notice that you are there.”
Younger people are also less likely to own a home, meaning they are not facing falling home prices or rising mortgage rates, he said.
Confidence was low across the country, with the exception of Waikato, where higher agricultural export prices boosted sentiment, and Wellington, where the labor market is “abnormally” tight.
https://www.rnz.co.nz/news/business/475295/consumer-confidence-languishing-at-low-level-westpac Consumer Confidence ‘Falters’ at Low Levels – Westpac