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ANZ-Roy MorganConsumer Confidence
 
October 2009
Contacts:
Cameron Bagrie
ANZ Chief EconomistTelephone: +64 4 802 2212E-mail:bagriec@anz.com
Mark Dansey
Roy MorganTelephone: +64 9 912 7032E-mail:mark.dansey@roymorgan.com
 
ANZ Roy MorganConsumer Confidence
Level ChangeOct-0897.0 -12.9Nov-0899.7 2.7Dec-08100.1 0.4Jan-09103.7 3.6Feb-0997.1 -6.6Mar-0993.4 -3.7Apr-09104.6 11.2May-09105.8 1.2Jun-09103.4 -2.4Jul-09107.8 4.4Aug-09112.3 4.5Sep-09120.0 7.7Oct-09125.9 5.9
The survey was conducted fromOctober 5 to 18, across New Zealandby telephone with a cross section of 1,109 people aged 14 and over.
October-feistiness 
•
 
Consumer confidence up.
•
 
Expectations of a better future, as opposed to currentconditions, continues to underpin consumer confidence.
•
 
However, both expectations and current conditions areimproving.
•
 
Two-year average inflation expectations 3.8 percent.The ANZ-Roy Morgan Consumer Confidence
measure lifted to a 22-month high in October, rising 5.9 points on the month prior to 125.9. Suchreadings add to the array of “soft” economic data that points to an economyfirming over the year ahead.
ANZ-Roy Morgan Consumer Confidence
8090100110120130140150Jan04Jul04Jan05Jul05Jan06Jul06Jan07Jul07Jan08Jul08Jan09Jul09
Sources:
ANZ National, Roy Morgan
Index
 
While the headline confidence measure has improved, it masks awide gulf that has opened up between expectations of the futureversus how consumers are feeling right at the moment.
This can beseen from the divergence in our Future Conditions Index and the CurrentConditions one
(refer to the bottom right-hand chart on page 3)
. The formerhas risen to a new record high for the series since its inception in January2004, while the latter is still below the 100 level (although on an improvingtrajectory over the month), indicating pessimists marginally out-numberingthe optimists. It is the latter that history has shown to be most correlatedwith actual spending decisions. Improving steps are to be acknowledged butthere is still a way to go.
 
ANZ-Roy Morgan Consumer Confidence
October 20092
The biggest jump in the component questions that make up theoverall measure was about expectations of better times ahead overthe next 12 months (up 13 points).
However, while the future isexpected to look much brighter, a net 17 percent of respondents still feelfinancially worse off now compared to last year. Once again though, whilelow – and lagging, there has been a slight improving trend since July
(refertable page 3)
.
Retailers will no doubt be heartened to see a 10 pointrise in the net percentage of people expecting to buy a majorhousehold item,
especially with the Christmas shopping season about tokick off. If this translates through, we should see some pick-up in retailspending, though until we see Current Conditions pick-up in a moresustained fashion it portends of something modest.
In terms of the survey’s detail,
consumer confidence is generallystronger across younger age groups, and more reserved with age. Males aremore confident at present – particularly so in regard to buying a householditem. A net 20 percent of males think it is a good time to buy a householditem. By contrast, a net 7 percent for females believe it is a good time tobuy a major household item. Across the regional standings, Wellingtonleads the way in terms of overall sentiment, with a consumer confidencefigure of 128.5. At the other extreme, non-Canterbury South Island is thelaggard, with a consumer confidence figure of 117.8.
This month’s survey includes a key question in relation to howconsumers view inflation going forward.
In terms of informationcontent, we can split inflation expectations questions into two sorts. Thefirst give information about long-term inflation expectations, which 5-yearand 10-year ahead questions are focused. Such questions offer criticalinsight into whether inflation expectations are anchored or slipping.Conversely, inflation expectations questions that are more short-termfocused (say 1 or 2 years ahead), offer little in regard to inflationexpectations
per se
, but can be used as barometers of wage bargainingbehaviour, which are in themselves critical components of any monetarypolicy framework.
When asked where respondents thought inflation would reside onaverage over the next two years, the answer came back 3.8 percent
.At present, it is impossible to provide insightful comment on such a figure.Yet this is a key element of the survey. Ones immediate reaction is that itresides outside the top-end of the 1 to 3 percent policy band. But aroundthe globe there is an inherent upwards bias in such surveys. At present wewill hold judgment and assess on a month-to-month basis how theresponses evolve. Ultimately it is the trends over time that will deliver themost information content, both to the market and the Reserve Bank.
 
ANZ-Roy Morgan Consumer Confidence
October 20093
Survey Summary Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09
No. of Interviews1,071 1,060 1,117 1,038 1,039 1,013 1,058 1,109
Q1.
Would you say you and your family are better-off financially or worse off than you were at this time last year?
 
Better Off 26 25 24 24 20 23 25 23Worse Off 42 40 42 43 46 44 43 39
Net Balance-16 -15 -18 -19 -26 -21 -18 -17Q2.
This time next year, do you and your family expect to be better-off financially or worse off than you are now?Better Off 48 51 50 49 47 55 56 56Worse Off 26 18 20 21 20 16 12 12
Net Balance22 33 30 28 27 39 44 43Q3.
Thinking of economic conditions in New Zealand as a whole. In the next 12 months, do you expect we’ll have good timesfinancially, bad times or some good and some bad?
 
Good Times21 27 29 26 31 40 47 53Bad Times64 53 53 53 41 39 28 21
Net Balance-43 -26 -24 -27 -10 1 19 32Q4
. Looking ahead, what would you say is more likely, that in New Zealand as a whole, we’ll have continuous good timesduring the next five years or so, or we’ll have bad times, or some good and some bad?
 
Good Times43 55 54 52 56 62 64 68Bad Times31 22 20 17 13 13 13 11
Net Balance12 33 34 35 43 49 51 57Q5.
Generally, do you think now is a good time, or a bad time, for people to buy major household items?Good Time to Buy38 41 45 42 45 37 45 48Bad Time to Buy45 44 39 42 40 43 42 35
Net Balance-7 -3 6 0 5 -6 3 13ANZ Roy Morgan Consumer Confidence
(100 plus the unweighted average of the five net balances)
 93.4 104.6 105.8 103.4 107.8 112.3 120.0 125.9
-40-30-20-100102030Jan04Jan05Jan06Jan07Jan08Jan09
Sources:
ANZ National, Roy Morgan
Q1. Better off past year
05101520253035404550Jan04Jan05Jan06Jan07Jan08Jan09
Sources:
ANZ National, Roy Morgan
Q2. Better off next year
-60-40-200204060Jan04Jan05Jan06Jan07Jan08Jan09
Sources:
ANZ National, Roy Morgan
Q3. NZ economy 12mths time
 
010203040506070Jan04Jan05Jan06Jan07Jan08Jan09
Sources:
ANZ National, Roy Morgan
Q4. Outlook 5yrs ahead
-20-10010203040506070Jan04Jan05Jan06Jan07Jan08Jan09
Sources:
ANZ National, Roy Morgan
Q5. Buy major household item
8090100110120130140150Jan04Jan05Jan06Jan07Jan08Jan09
Sources:
ANZ National, Roy Morgan
Current vs Future Conditions
FutureCurrent
 
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