Consumers upbeat despite economy
Consumer confidence appears to be on the rise despite evidence the economy isn’t fully firing.
Westpac said its consumer confidence index rose 1.5 points to a two-year high of 113.4 in June, shaking off the usual winter blues.
The proportion of people expecting better economic times in the year ahead – minus those who were expecting worse times – jumped 6.3 percentage points to 18.2 per cent.
The survey was conducted in early June, after tax cuts heralded in the Budget in May, but before the release of disappointing quarterly GDP and import and export figures last week.
It indicated consumers were in no mood to heed a warning issued by the Organisation for Economic Co-operation and Development on Thursday that Kiwis needed to save more.
For the past 19 years, Westpac has asked households what they would do if they received a $10,000 windfall.
‘‘The number of households who said they would use these funds for savings or paying down debt actually fell,’’ the bank said.
‘‘The proportion of households who are focusing on savings or debt repayment has only been this low once before.’’
The bank said that was likely to be because of increased confidence about the economic outlook.
But debt levels were now at record highs, with much of it leveraged against homes, Westpac noted.
The Reserve Bank, which will make its next statement on interest rates on Thursday, may take more solace from consumers’ actions than their words.
Westpac said that despite their higher confidence about the year ahead, consumers were nonetheless keeping a watch on the purse strings.
‘‘Notably, the number of households who think now is a good time to purchase a major household item has been trending down,’’ the bank said.
‘‘Households are also reporting that they have been reining in their spending on leisure activities like dining out.’’