Economic pessimism spreads
The Westpac McDermott Miller Consumer Confidence Index has taken a significant dip this June quarter, dropping 11 points to a disheartening level of 82.2.
This marks a return to the lows observed throughout much of the past year, with pessimism about economic conditions prevailing among New Zealand households.
“The number of New Zealanders who are feeling pessimistic about economic conditions outnumbers those that are optimistic by a wide margin,” said Satish Ranchhod (pictured above), senior economist at Westpac NZ.
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Financial pressures intensify
Households across New Zealand are feeling the squeeze, with 42% reporting a deterioration in their financial position over the past year and only 14% noting improvements.
Despite a slowdown in overall inflation, families continue to face steep increases in housing costs, insurance, and local council services.
The report underscored a gloomy financial outlook, with most households anticipating further declines in their financial situation over the coming year.
Labour market concerns grow
Amid the economic downturn, job security has become a growing concern for many, especially as unemployment has risen to 4.3% with expectations of further increases.
“Many of the households we’ve spoken to during our recent travels around the country mentioned concern about the softening in the labour market and job security,” Ranchhod said, indicating a deepening unease about the economic future.
Spending retraction deepens
With increasing living costs and economic uncertainty, many households are tightening their belts, particularly reducing discretionary spending on leisure activities and major purchases.
This cautious consumer behaviour has led to a notable decline in retail spending, which has fallen nearly 2% over the past year despite population growth and inflation.
Nationwide pessimism
From Cape Reinga to the Bluff, consumer confidence is low across all regions of New Zealand. Even in areas like Otago and Gisborne, where slight increases in confidence were noted, the overall sentiment remains negative.
“Confidence is low in every corner of the country," Ranchhod said.
Generational divide in consumer confidence
The impact of the current economic climate varies across age groups, with those under 50 feeling the brunt of increasing mortgage rates and rent costs, thus experiencing a more pronounced drop in confidence.
In contrast, those aged 50 and over, typically mortgage-free homeowners with financial assets, are seeing less dramatic declines in their sentiment due to different economic exposures.
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