Full of confidence

Satish Ranchhod.
Satish Ranchhod.
New Zealanders will end the year brimming with confidence, according to three indicators out in the past few days.

First, the ANZ Business Outlook showed business confidence rising to an eight-month high in December.

The ANZ Job Ads series lifted a further 2% in November, the third monthly rise in a row and the first time that had occurred since early 2014.

And yesterday, the Westpac McDermott Miller consumer confidence index ended the year on 110.7 points and a level just below the long-term average of 111.5.

Westpac senior economist Satish Ranchhod said New Zealand households seemed to have found their Christmas spirit.

"The pick-up in confidence comes on top of other signs the economy is continuing to hum along ...

"With the Reserve Bank not only coming to the party, but also spiking the punch with 1% of interest rate cuts in recent months, it's shaping up to be a good season for many retailers.''

But while the Champagne corks might be popping right now, households would need to be careful the Christmas cheer did not result in a nasty hangover in the new year, he said.

Growth was set to slow in 2016 as the economy confronted problems such as drought, softness in dairy prices, a slowdown in the Auckland property market and the flattening of construction activity in Canterbury.

It was a combination that would push unemployment upwards.

It was important for households to ensure they kept debt and borrowing levels manageable, Mr Ranchhod said.

Mr Ranchhod's predictions on employment levels differed from those of ANZ chief economist Cameron Bagrie, who was predicting unemployment to drift back down below 6% in the coming year.

ANZ senior economist Sharon Zollner said total job advertising, as measured by the ANZ Job Ads series, was up 1.8% compared with the previous corresponding period.

Internet job advertising rose 1.6% in November, on top of solid increases in September and October.

Newspaper job advertising bounced back 7.1% in November after a sharp fall in October.

Hawkes Bay and Auckland were showing double-digit and increasing growth in job advertisements versus a year ago.

Canterbury was declining at double-digit rates by the same measure.

Otago was up 1.2% year-on-year.

The lift in job advertisements in recent months reflected a broad-based acceleration in the economy, Ms Zollner said.

Gross domestic product (economic) growth in the third quarter outperformed the first and second quarters put together.

It was not surprising to see employment, through job advertisements, responding with the usual lag.

"Although labour demand is strengthening, labour supply is very strong thanks to record net migration. Absorbing this is still quite an ask. However, we are now approaching rates of demand to turn the unemployment rate lower.''

McDermott Miller director John McDougall said the December result in the consumer confidence survey was still 4.2 points below the level prevailing last Christmas but marked the largest quarterly increase since December 2013.

The lift was largely driven by a return to positive sentiment about the short-term prospects for the New Zealand economy with a net 7.7% expecting good times over the coming year - a sharp contrast with the net 15% expecting bad times in September.

Among those consumers expecting good economic times over the next year, the most commonly cited reason was a belief in "effective government economic policy''.

Only 10% credited better export prospects.

Among those expecting bad economic times, the most common reason was "wrong government economic government policies'' followed by low dairy prices, he said.

Consumers in rural areas (109.1) were slightly less confident than those in metropolitan centres (113.6).

"The return to strongly optimistic levels of consumer confidence bodes well for strong retail sales in the remaining Christmas period and for leisure and holiday spending over the coming weeks,'' Mr McDougall said.

 


At a glance

• December consumer confidence: 110.7 points, up 4.7 points on September

• Business confidence rises to an eight-month high

• Job Ad Series has risen for the third consecutive month, first time since early 2014

• Strong retail sales expected, but warnings about getting into debt issued 


 

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