New Zealand: Consumer confidence decreases for second consecutive period

Confidence among New Zealanders fell for second consecutive quarter in Q2 as households became more worried about the country’s economic prospects. The Westpac-McDermott Miller consumer confidence indicator fell from the 109.6 points registered in Q1 to 106.0 points in Q2. Although the indicator still sits above the 100-threshold that separates optimists from pessimists, consumer confidence fell to the lowest level since Q3 2015.

According to Westpac, the drop observed in the second quarter reflected that consumers’ were more concerned about where the economy is heading in the five years. While consumers felt a little better about their current financial situation, they reported less optimism about the current state of the overall economy. Nonetheless, Westpac pointed out that, although households are nervous about the economic environment, “they are not putting away their wallets just yet.” This is due to the current low level of the interest rate.

High levels of consumer confidence support growth in private consumption. FocusEconomics panelists expect that private consumption will increase 3.0% in 2016, which is unchanged over the previous month’s projection. For 2017, analysts expect private consumption also to expand 2.7%.