Inflation expectations edged up to 4.2% in March in the latest ANZ-Roy Morgan Consumer Confidence Survey, the first time in nine months inflation expectations have passed the 4% mark.
ANZ’s chief economist Sharon Zollner said New Zealand’s economy was “improving under the hood, but we’re at the very early stage where it doesn’t feel like it”.
The ANZ survey shows consumer confidence fell four points to 93.2 in March, with the current conditions index also falling, down five points to 81.9.
However, the future conditions index, which is made up of forward-looking questions, eased up two points to 100.7.
Two-year ahead inflation expectations rose 0.2% to 4.2% – the first time inflation expectations have been past 4% in this survey since June 2024. Expected house price inflation year-on-year rose to 3.4% from 3.2%.
“Consumer confidence fell in March, with declines seen across nearly all components. The most telling question for retailers is whether people think it’s a good time to buy a major household item,” Zollner said.
“People with mortgages are now meaningfully keener to spend than those without, which is very unusual. Retailers will be hoping that indicates some pent-up demand.”
Perceptions of current personal financial situations fell nine points to -21% in the March survey.
A net 16% expect to be better off this time next year, down five points from a month earlier and a net 16% think it’s a bad time to buy a major household item, down from 15% in February.
Zollner said household inflation expectations had been very stable but jumped in March, despite falling petrol prices.
“Household inflation expectations matter less for the inflation outlook than the expectations of those who actually directly set prices in the economy. But the lift is interesting insofar as it echoes what have been some pretty stubborn inflation indicators out of the ANZ Business Outlook survey recently,” she said.
The ANZ Business Outlook survey for March will be released on Monday. February’s survey found NZ’s economy was remaining on the path to recovery as interest rates fell and commodity export prices outperformed expectations.
“The economy is improving under the hood, but we’re at the very early stage where it doesn’t feel like it. That’s because both unemployment and business failures, the human face of recessions, continue to lift. But they are primarily lagging indicators relating to the cumulated stress of bad times that have gone before,” Zollner said in Friday’s consumer confidence survey.
“The economy returned to growth in Q4 [the fourth quarter], and we expect positive – if unspectacular – growth throughout this year. Retailers are telling us things are less dire, and our card spending data concurs, but it’s clearly still tough times out there. Until the labour market and housing market turn definitively higher, consumers are likely to remain in a cautious mood.”
The survey reported perceptions regarding the economic outlook in 12 months’ time falling four points to -20%. The five-year-ahead measure rose from 5% to 6%.
6 Comments
I'm waiting for large scale layoffs from the corporate sector after some poor earnings reports for 2024. Maybe they're holding onto staff for as long as possible in case the economy recovers. More public sector layoffs are very likely and this will have an impact if they are widespread.
Try asking someone who knows what's under a bonnet.
And surveying folk who aren't fed nonsense
Just saying.
You're never going to hear or read anything insightful, enlightening, or tangible or from Zollner. That's not her role. Her purpose is simply to paint the narrative in a calming, 'she'll be right' manner. Imagine she gets paid well for it but it would be a terribly soulless life for some people.
After I pranged the family car my father, a RNZAF pilot, advised me in his experience, overconfidence was far more deadly than lack of confidence. But in the case of the motor, as a simile here, don’t think it is verging on that sort of risk.
"The economy is improving it just doesn't feel like it".
Huh??
Maybe because it's not?
The job market is rather abysmal outside key centres in many areas of employment. Until there's a meaningful uplift in job listings I can't see the tangible improvement.
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