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NZ consumer confidence dips in August

NZN 18/08/2016 Sophie Boot

New Zealand consumer confidence dipped in August with respondents expecting house price growth to slow, particularly in Auckland.

The ANZ-Roy Morgan consumer confidence index slipped to 117.7 from 118.2 in July. A net 25 per cent of respondents expect to be better off financially in a year's time, compared to 29 per cent a month earlier.

They were slightly more optimistic about their 12-month outlook for the economy, with a net 5 per cent expecting good times ahead, up from 4 per cent in July, while over a five-year horizon a net 10 per cent see more good times, compared to 13 per cent.

The current conditions index gained 1.8 points to 124.3 while the future conditions index decreased 2.1 points to 113.4.

"The economic choreography looks respectable so it's of little surprise to see consumer confidence holding at elevated levels," ANZ chief economist Cameron Bagrie said.

"Our confidence composite gauge (combining business and consumer sentiment) continues to flag solid-to-strong GDP growth over the coming months. Three to four per cent real GDP growth is on offer. That would mark the sixth year of economic expansion."

The global dairy price recovery is helping mitigate the key risk to the economy of low dairy incomes, Bagrie said, while the strong kiwi dollar is a boon for consumers but a headwind for exporters.

The survey of 1,002 people showed a net 37 per cent of respondents think it's a good time to buy a major household item, up one percentage point from a month earlier, while inflation expectations rose to 3.4 per cent annual pace from 3.3 per cent in July.

Respondents expect house prices to rise more gradually, with consumers predicting an annual increase of 5 per cent over the next two years, down from 6.1 per cent a month earlier.

ANZ's Bagrie said this fall was largely due to Auckland, where expectations eased from 8.4 per cent to 5.5 per cent.

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