Consumer confidence has slipped in the early part of the year as households become increasingly worried about where the economy is headed over the next few years.
The Westpac McDermott Miller Consumer Confidence Index fell 1.1% in the three months ended March to 109.6.
The present conditions index rose slightly to 111.7 but the expected conditions index fell nearly 2points to 108.2.
Westpac economist Satish Ranchhod said it was not surprising there had been some pull-back in confidence in recent months.
The start of the year saw a barrage of bad news hit the headlines.
Much of it was related to signs of conditions in the global economy having deteriorated, signalling tougher times ahead for the dairying sector.
‘‘These developments have clearly made households nervous about where the economy is heading. The proportion of households now expecting good economic times over the next five years has dropped to its lowest level since 1991.''
Households' more upbeat assessment of their personal economic conditions meant even though they were nervous about the outlook in general, it was likely they would remain in the mood to spend for the time being.
A growing proportion of households were reporting increased spending on entertainment and eating out, he said.
Also, the number of households thinking it was now a good time to purchase a major household item continued to climb.
Low interest rates were playing a role in boosting the spending appetites of households, Mr Ranchhod said.
When asked what they would do with a cash windfall, households reported they were more likely to spend it than pay down debt.
The proportion of households indicating they would use the windfall to pay down debt was only just above the record low it reached last quarter.
Also helping to boost household confidence were some other positive developments, including firm growth in domestic economic activity and strengthening in the labour market.
‘‘Putting it all together, we're left with the picture of an economy which, while still facing some challenges, is growing at a moderate pace.''
The index provided a divergence across regions of consumer confidence levels, he said.
Aucklanders were noticeably more upbeat than elsewhere.
Auckland had been enjoying a potent cocktail of strong construction activity, rapid population growth and a strengthening service sector.
Those conditions had boosted employment in the region and resulted in household spending growing at a solid pace.
With those conditions expected to persist for some time, Aucklanders were also more optimistic about the outlook for the next few years.
Secondly, confidence levels continued to differ significantly according to household income levels, Mr Ranchhod said.
Households with high incomes (above $100,000) were much more positive on the economic outlook.
In contrast, those on low incomes below $30,000 were more pessimistic and particularly concerned about the future of the economy.
