Optimism rises, challenges remain
The Westpac McDermott Miller Consumer Confidence Index rose by 9 points to 90.8 in September, indicating a slight improvement in New Zealanders' outlook on the economy.
While confidence remains low, the rise suggests that some of the previous pessimism is easing.
“New Zealand families are starting to feel a bit more optimistic (or at least less pessimistic) about the outlook for the economy over the coming year,” said Satish Ranchhod (pictured above), senior economist at Westpac NZ.
Financial pressures still squeeze households
Despite this increase, New Zealand households continue to feel the strain on their finances, driven by the rising cost of utilities, rates, insurance, and other essentials.
Although recent tax cuts have provided some relief, many households report their financial situation has worsened over the past year.
As a result, spending on big-ticket items and leisure activities like dining out has slowed.
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Optimism rises as economic headwinds ease
A significant driver of the improved confidence is the easing of inflation, which has dropped to its lowest level since 2021 and is expected to continue falling.
Lower inflation has already started to reduce borrowing costs, with mortgage rates gradually decreasing.
Ranchhod noted that “many families are set to see an improvement in their finances after they’ve faced large increases in borrowing costs over the past few years.”
The number of households expecting to be better off financially in 12 months has reached a three-year high.
Consumer confidence boost seen across the country
September’s increase in confidence was broad, spanning across different regions, income levels, and age groups.
However, Otago and the Nelson/Marlborough/West Coast regions saw no change in confidence.
Households aged 30 to 49, who are more likely to have mortgages, saw the largest increase in optimism, as falling interest rates offered much-needed relief.
About the Westpac McDermott Miller Consumer Confidence Index
The Westpac McDermott Miller Consumer Confidence Index, based on responses from more than 1,500 households, measures how people view their current financial situation, their outlook for the New Zealand economy, and their expectations for the future.
An index reading below 100 indicates more pessimists than optimists.
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