Financial pressures continuing to bite

Consumer confidence is continuing to languish at low levels in the face of mounting financial pressures.

The Westpac McDermott Miller Consumer Confidence Index rose 5.4 points in June, to a level of 83.1. However, that’s still well below average and signals that the number of New Zealand households who are pessimistic about the economic landscape outweighs those who are optimistic by a wide margin.

“More than 40% of households have told us that their financial position went backwards over the past year, while only 14% said that their financial position had improved,” said Westpac Senior Economist Satish Ranchhod. “Large increases in living costs, especially for necessities like food, are hitting every family in the country in the pocket. On top of that, many families are also grappling with higher borrowing costs. Those factors are squeezing households’ finances and are constraining spending in the economy.”

Some of the factors that have been weighing on households’ finances are now turning. “Notably, although inflation is still high, it is past its peak and is set to continue easing over the year ahead,” commented Mr Ranchhod. “Even so, many households will still be facing strong financial headwinds over the remainder of this year.”

“Although consumer confidence has risen this quarter, with over two in five respondents expecting bad economic times ahead for New Zealand in the next 12 months, and a quarter of respondents expecting their own financial situation to worsen, it looks like the overwhelming feeling of pessimism amongst consumers is going to remain for the foreseeable future,” commented Imogen Rendall, Market Research Director of McDermott Miller Limited.

“Looking across the different demographic groups, there are some differences. Men’s confidence has increased this quarter to 88.8 (up 7.3 points,) while women remain more pessimistic at 77.6 (an increase of 3.6 points). While both men and women are similarly concerned about their personal and household finances, both past and future, men are more optimistic about New Zealand’s longer term financial prosperity,” noted Ms Rendall.

“The confidence of those aged 30-49 has remained virtually unchanged from last quarter at 78.1 (an increase of just 0.4 points). Personal and household finances appear to have been particularly badly affected in this age group, with close to half worse off now compared to a year ago. In contrast, confidence amongst younger people aged 18-29 has increased by 4.2 points to 90.4 and those aged 50 plus have also experienced a jump in confidence of 9.7 points, with a confidence index score of 84.3,” said Ms Rendall.

A full description of the background and specifications of the survey are attached. The survey was conducted over 1-12 June 2023, with a sample size of 1,560. An index number over 100 indicates that optimists outnumber pessimists. The margin of error of the survey is 2.5%.

https://img.scoop.co.nz/media/pdfs/2306/Westpac_McDermott_Miller_Consumer_Confidence_Q2_2023.pdf

https://img.scoop.co.nz/media/pdfs/2306/CCS_June_2023_Brief_Background.pdf

https://img.scoop.co.nz/media/pdfs/2306/CCS_June_2023_Full_Background_and_Index_to_Tables.pdf

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