NZ consumer confidence at nine-year high

New Zealand consumer confidence has risen to a nine-year high with optimism about the economy in the year ahead approaching record levels.

The Westpac McDermott Miller Consumer Confidence Index has risen to 121.7 for the March quarter, up from 120.1 in the December survey, to the highest level since the credit-fuelled boom times of 2005.

A reading above 100 indicates more optimists than pessimists.

Thirty-five per cent of those polled expect good times for the economy over the year ahead, up from 27.8 per cent in the December quarter and the third-highest reading in the survey's history.

Advertisement

"Consumers' economic optimism, their assessment of their financial situation and their reported attitudes to spending have all continued to pick up," said Westpac senior economist Felix Delbruck.

"Their attitudes towards their own finances and towards spending remain relatively cautious."

The survey results come less than a week after New Zealand's Reserve Bank raised interest rates from historic low levels on concern a buoyant economy will push up inflation.

The hike is the first in a series of rises expected over the next two years, which will hit the pockets of almost three-quarters of home loan borrowers who are either on a floating interest rate or will need to pick a new fixed interest rate within the next 12 months.

The Westpac survey showed a modest drop in the percentage of households expecting an improvement in their financial situation, at 10.6 per cent from 12.1 per cent in the fourth quarter.

"We continue to be of the view that, in the next couple of years, consumer spending will be a passenger as other sectors of the economy sit in the driver's seat," Mr Delbruck said.

The survey shows optimism about the economy in the year ahead has only been higher in June 1994, when 38.6 per cent of respondents were upbeat, and in December 2004 with a 36.4 per cent positive reading.

Source: Sydney Morning Herald