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6/4/2018 — General
Consumer confidence remains high
By Simon Hartley

Consumer confidence remains high, underpinned by low unemployment, income growth, low interest rates and a housing market in recovery.

However, the rosy outlook includes a barb on prudent management of household debt while times are good.

The ANZ-Roy Morgan Consumer Confidence Index lifted slightly from 127.7 points in February to 128 in March.

ANZ chief economist, Sharon Zollner said consumer confidence remained high, with no difference between current and expected future conditions.

“Jobs are plentiful, there's talk of higher wages, and the Auckland housing market has found a floor,” she said.

“With household debt already at a record high as a proportion of incomes, a steady-as-she-goes housing market is just the ticket,” she said.

However, high consumer confidence could be a “mixed blessing” at this stage of the economic cycle.

“If it primarily reflects a frothy housing market, it can lead to more borrowing than is prudent, with a resulting boom-bust dynamic in consumption,” Mrs Zollner said.

It was fortunate that at present the buoyant confidence appeared to be founded on solid income growth, she said. A net 35% of consumers expect to be better off financially this time next year, up one point, while 39% said it was a good time to buy a major household item, which was down one point.

Both the “current conditions” and “future conditions” index', at respectively 127.7 and 128.2 points were considerably higher than where they finished 2017.

Mrs Zollner perceptions regarding the economic outlook lifted four points to more than 25%, well off its lows struck in December. While the strong labour market was supporting household incomes and various government policies are intended to provide a further boost, at the same time strong commodity prices were also boosting exporter incomes.

*Simon Hartley is senior business reporter and assistant chief reporter for the Otago Daily Times.

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