Consumers remain cautious heading into key shopping season as confidence falls, ANZ says (Update 1)

The pending shopping season may not be as strong as many are wishing for after consumer confidence fell in November, the ANZ-Roy Morgan Consumer Confidence Index showed. (Update 1 includes full comments.) Confidence for current conditions fell 4.1 index points from October and remained below the Index's 100 point neutral benchmark at 94.2. "This suggests consumers will remain cautious about their spending decisions heading into the all important holiday shopping season," ANZ Chief Economist Cameron Bagrie said. If this is the case then it will support the Reserve Bank's view that it can keep the Official Cash Rate on hold at 2.5% until the 'second half of 2010' if consumer spending does not pick up in coming months. Headline confidence remained above the neutral level but fell 4.4 points to 121.5 over the month. This was the first fall in the headline measure in four months. "It is too soon to tell whether this is a temporary drop following the previous month's strong gains, or the start of a new trend. Despite the pullback in the month, the level of confidence remains high and well above the 100 neutral reading," Bagrie said. Here are ANZ and Roy Morgan comments on the November survey:

All the component questions that make up our confidence measure fell bar one. The biggest decline was about the outlook over the next five years, which fell 11.3 points. Nonetheless a net 46 percent still expect to be better off over the coming five years. Expectations about economic conditions over the coming 12 months retreated by 3 points, as did perceptions about whether it is a good time to buy a major household item. But all remain firmly in positive territory. While the economy may have emerged from recession and house prices are up over 9 percent from their January lows, more people are still feeling worse off financially compared to a year ago. The gulf between our Future Conditions and Current Conditions indexes remain wide. With the economy at an inflection point, it is only natural to expect current conditions to lag expectations somewhat. Any improvement must start with better expectations towards the future. However, the magnitude of the divide indicates deeper forces that are shaping the outlook. Future Conditions fell 4.6 points to 139.7 but the level remains elevated. The Current Conditions Index has proven to be the key leading gauge for spending and remains below the key 100 benchmark, falling 4.1 points to 94.2 in November. This suggests consumers will remain cautious about their spending decisions heading into the all important holiday shopping season. Looking at the details of this month's survey, males continue to be more confident than females across all the component questions, and more males actually expect better economic conditions over the next 12 months compared to last month. A net 17 percent of males think now is a good time to buy a major household item (down 2 points), compared to only a net 3 percent for females (down 4 points). Across the regions, Aucklanders are the most confident (down 1.4 points to 126.1), taking over the mantle from Wellingtonians (down 8.1 points to 120.3). Non-Canterbury South Island recorded the largest decline in confidence (down 9.7 points) and continues to be the least confident at 108.1.