New Zealand: Consumer confidence plummets to a two-year low
March 17, 2011
Consumer confidence fell to its lowest level in two years, as the recent earthquake raised concerns among consumers about the current economic situation and the near-term economic outlook. The Westpac McDermott Miller consumer confidence index fell to 97.9 points in the first quarter, which was well below the 108.3 points observed in the last quarter of 2010. After declining for two consecutive quarters, the first quarter reading represented the lowest level of consumer sentiment since the first quarter of 2009 and at the current level, confidence is now below the 100-point threshold, which indicates that pessimists outnumber optimists. According to the survey, the fall in consumer confidence was broad-based. That said, the key driver behind the first quarter drop was consumers more pessimistic assessment about the economic outlook for the next 12 months, with a net 46.5% of respondents expecting weaker economic conditions, compared to the net 9.7% of respondents observed in the previous quarter. In addition, consumers' perception of their own purchasing power fell, with a net 12.5% of consumers reporting it is a good time to buy major household items, compared to the 16.5% of respondents observed in the previous quarter.
Author: Ricardo Aceves, Senior Economist