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Cautious Kiwis in confidence crisis?

Thursday, March 18, 2010

Source: Catherine Deshayes

New Zealand consumer confidence retreated for a second month in a row in March, with respondents remaining optimistic but cautious in the face of rising unemployment and a slowing housing market.

The ANZ-Roy Morgan Consumer confidence index slipped two points to 121.8, its lowest in three months, a survey showed on Thursday. A reading above 100 shows optimism, and a reading below indicates pessimism.

Confidence in current personal financial conditions improved with a net 11 percent saying they were worse off than a year ago, compared with 15 percent in February.

Households were positive about their own outlook over the next 12 months, with a net 33 percent expecting an improvement, although that figure is down from 40 percent in February.

"Consumers have not yet acted on improved confidence, with a willingness to increase discretionary spending," said ANZ-National economist Steve Edwards.

"Uncertainty regarding upcoming tax changes and a wariness regarding the outlook for the labour market is curtailing retail spend," he added.

The survey of 993 people showed respondents were less optimistic about the near-and-long term outlooks for the overall economy, but more believed it was a good time to buy a major household item.

On Wednesday, the Westpac-McDermott Miller consumer confidence index also slipped for a second quarter in a row as households remained cautious in the face of a sluggish economic recovery.

Last week, the Reserve Bank of New Zealand said that subdued economic growth, weak businesses and cautious consumers meant there was no urgency to raise the cash rate from its record low of 2.5 percent before the middle of the year.