New Zealand’s consumer confidence declined to an 11-month low in July, adding to evidence that weak spending and housing demand may curb economic growth.
Sentiment fell to 115.6 from 122 in June, according to an index compiled by ANZ National Bank Ltd. and Roy Morgan Research. That is the lowest since August and below the historical average, Wellington-based ANZ said in an e-mailed statement.
Governor Alan Bollard last month raised the official cash rate for the first time in three years and said he intended to boost borrowing costs gradually to combat inflation pressures. Finance Minister Bill English, who will reduce income taxes in October, said today that economic growth is rebalancing toward exports as consumers are being more careful with their spending.
“It looks like households will remain cautious with their spending for a while,” said Khoon Goh, head of market economics at ANZ National. “The negatives are outweighing the positives in consumers’ minds at present.”
The 1,062 consumers surveyed are least optimistic about current conditions, with 41 percent saying they are worse off than a year ago, Goh said. Fewer said it is a good time to buy a major household item, which “is not pointing to a big spending surge that the retail sector had been hoping for,” he said.
Consumers are also less optimistic about future conditions, with a net 3 percent expecting the economy to be better in a year’s time, down from 18 percent in June. The net measure subtracts pessimists from optimists.
The fall in July is the largest since October 2008, following the collapse of Lehman Brothers Holdings Inc., and may reflect a focus on global economic uncertainty, Goh said.
“While we do not think recent global concerns will have anywhere near the same effect this time, consumers are clearly getting worried,” he said.
All 15 economists surveyed by Bloomberg News expect Bollard will raise the cash rate a quarter-point to 3 percent on July 29. Goh is one of four economists who forecast at least one pause at the remaining reviews in September, October and December.