Consumer confidence hits 18-month high in latest ANZ survey

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ANZ chief economist Sharon Zollner said sentiment was still downbeat.
Photo: 123rf

Consumer confidence has risen to its best level in 18 months amid expectations of an end to rising interest rates, falling inflation and rising house prices.

The ANZ-Roy Morgan Consumer Confidence Index lifted six points to 85.5, showing pessimists still outnumber optimists, but it was the best level since January 2022.

More people reported feeling better off financially, expected to be better off next year, and were less gloomy about the economy.

ANZ chief economist Sharon Zollner said sentiment was still downbeat, with households buffeted by various pressures.

“The overall level of confidence remains very subdued. While job security is still excellent on the whole and wage growth historically strong, ongoing cost of living increases continue to bite.

Sharon Zollner.
Photo: RNZ / DOM THOMAS

“There have also been widespread headlines about recession in the past month. Yet despite all that, confidence lifted markedly in June.”

She put that down, in part, to the Reserve Bank’s (RBNZ) last monetary statement in which it signalled a likely end to more rises in the Official Cash Rate.

Inflation expectations also fell markedly to 4.3 percent from May’s 4.8 percent reading, which Zollner said would be welcome news for the RBNZ.

“Lower inflation expectations signal that we’re likely to see consumer confidence continue to rise over coming months, barring any nasty surprises.”

But Zollner cautioned that previous surveys had shown the slide in consumer confidence matched the rise in inflation and inflation expectations, which probably overstated the situation, and so any improvement in confidence might overstate the recovery.

Consumers with mortgages were generally more pessimistic, but still positive about their future outlook, which pointed to hopes of falling interest rates, while optimism for rising house prices also increased.

The number thinking it was a bad time to buy a big household item, an indicator of retail spending, also improved seven points to a net 27 percent.

The ANZ survey’s improvement mirrored the trend shown in the recent Westpac-McDermott Miller quarterly report.