ANZ survey shows consumer confidence rose marginally in November; consumers still very cautious on spending

See the full ANZ Roy Morgan Consumer Confidence release below for detail.

Consumer confidence treaded water in November, rising a marginal point from the previous month.

Consumers’ view regarding current conditions remains low and continues to suggest caution in regards to spending behaviour.

Consumers expect house prices to rise 2.3 percent per year on average over the coming two years.

Whilst positive, this is below the expected rate of inflation. The ANZ-Roy Morgan Consumer Confidence measure rose one point to 114.5 in November.

Over the past five months consumer confidence has generally treaded water around the 115 mark and November’s reading continues this theme. The Current Conditions index rose a point to 93.4 (previously 92.3) while the Future Expectations component lifted from 127.9 to 128.6.

Such movements are by-and-large trivial and flag a steady-as-she goes mantra. But we take some encouragement from signs of a base forming. Recall last month saw a significant fall in consumers’ perceptions of current conditions, driven by a sizeable drop in appetite to buy a major household item. Our initial reaction was that post-GST dynamics were partly at play but we’d need more information (readings) before a full assessment could be made.

This month we’ve seen perceptions regarding whether it is a good time to buy a major item rise from -7 to -1, but a 4 point drop in consumers’ assessment of their current financial situation. This mix of improving (or less negative) appetites towards major item purchases but a weaker financial situation flags that consumer perception continues to be weighed down by dynamics beyond GST noise or mere timing.

Looking at the detail, males recorded an increase in confidence, lifting 2 points to 119. Females, on the other hand, reported a 1 point drop in confidence, to 110. This is the lowest level of confidence that females have recorded since August 2009.

Confidence in the 18-24 year old age group rebounded 13 points to an index figure of 130. Confidence in the 25-34 age cohort rose 7 points to 126. The oldest and youngest age groups eased between 3 and 4 points. Confidence in the 35-49 year old age group – those with real spending power – slipped 1 point to an index of 112. Confidence increased in both Auckland and Wellington and was unchanged in Canterbury. Wellington was the most confident region, at 120, with Auckland not far behind at 119.

Canterbury’s confidence measure was 114. Last month we introduced a new question into the survey, which asked respondents at what rate they expect house prices to grow (or decline) on average over the next 2 years. This measure increased from 1.6 percent last month, to 2.3 percent in November. While lifting and positive, we remain mindful of two cautionary points. Firstly, we don’t have a sufficiently long time series to benchmark such changes.

Secondly, house price growth at 2.3 percent per year remains below two-year ahead consumer inflation expectations, which inched up to 3.2 percent (previously 3.1) in the latest survey. So while house prices remain somewhat “sticky” in that they are still expected to grow, they are still expected to decline in real terms, which historically is how house price cycles have panned out.