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Consumer confidence lifts in third quarter

NZ Newswire logoNZ Newswire 18/09/2016 Sophie Boot

New Zealand consumer confidence picked up in the third quarter, while staying below its long-run average, as Kiwis, particularly in rural communities, remain nervous about the economy's trajectory.

The Westpac McDermott Miller consumer confidence index rose 2 points to 108 in the September quarter, below the long-run average of 111.5. A reading above 100 indicates optimists outnumber pessimists.

The present conditions index fell 0.8 points to 109.2, while the expected conditions index gained 3.9 points to 107.2.

The survey follows government figures last week showing gross domestic product expanded 0.9 per cent in the June quarter, a slower-than-expected pace partly reflecting an upward revision in the first quarter, as the nation's massive pipeline of building activity and booming housing market continued to underpin activity.

A net 1.8 per cent of the 1,559 people surveyed expect the economic outlook to improve over the coming year, compared to a net 1.3 per cent seeing a deterioration in the June quarter, while a net 15 per cent see better times over a five-year horizon, up from 7.2 per cent three months earlier.

Westpac Banking Corp acting chief economist Michael Gordon said households were feeling increasingly confident after firm economic activity in mid-2016, but there were still concerns about longer-term growth, with notable differences amongst different sectors of the population.

"Households in rural regions are particularly concerned about the economic outlook over the coming years," Mr Gordon said. "An extended period of challenging global demand and supply conditions means that many households in rural New Zealand have seen their incomes squeezed due to softness in commodity prices."

There were also clear confidence differences when considering income distribution, Mr Gordon said.

Households earning between $50,000 and $100,000 per year had the biggest confidence increase in the quarter, while households earning below $50,000 were least optimistic about their own financial situation and the country's economy going forward.

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