Consumers confident despite virus

Consumer confidence has eased slightly but remains in a strong position, according to the latest ANZ-Roy Morgan consumer confidence index.

“Consumers are feeling good for now, but emerging global risks could weigh in coming months due to the worrying Covid-19 outbreak,” said ANZ New Zealand chief economist Sharon Zollner.

Of the 1000 people questioned in the February survey, a net 32 per cent expect to be better off financially this time next year, up 2 points. However, perceptions of the economic outlook in the next 12 months fell 7 points to a net 3 per cent, the weakest since October. The five-year outlook increased to a net 20 per cent expecting better times ahead, compared to 13 per cent in the previous survey.

That contrasts with business confidence, which fell as firms were shaken throughout February as the impact from the coronavirus became increasingly apparent — a net 19 per cent are expecting economic conditions to deteriorate in the next 12 months, up from a net 13.2 per cent in December.

Those fears have not flowed through to consumers, who still feel optimistic about their economic lot.

Zollner said the improving housing market made homeowners feel richer, job opportunities are relatively plentiful, and interest rates are low.

While that’s supportive for consumer spending, it might not last as businesses become gloomier. Zollner said ANZ’s economists have been trimming their growth forecasts.