It has been a week of positive news, with New Zealand's current account deficit shrinking to a five-year low, Fonterra edging up its forecast payout and an expanding gross domestic product breaking five quarters of contraction, all before yesterday's release of the Westpac McDermott Miller confidence survey for the quarter to September.
The flurry of positive signs does not amount to proof the country is out of recession, but does indicate the likelihood the recession has bottomed out and the economy is showing signs of stability.
An index reading of consumer confidence above 100 indicates more optimists than pessimists and, on this scale, the third quarter survey climbed 14.3 points to 120.3 from the second quarter's 106.
All 11 regions in the survey had gains in confidence, with Otago up 12.8 points on the previous quarter to 117.4 points.
Westpac senior economist Donna Purdue said all components of the survey recorded increases during the quarter, with the dominant influence being a sharp turnaround in the short-term outlook for the economy.
Seventeen percent of consumers expected better economic times during the next year, up 46 points from the June survey, in which almost 30% of people expected difficult economic times to continue.
"Consumers, regardless of age, income group, gender or region, are convinced that better times lie ahead," Ms Purdue said.
The percentage of those expecting good economic times during the next year doubled from 21% in June to 42% for September, while the figure for those forecasting bad economic times was down from 49% to 25%.
"This shift is stronger among rural consumers than among secondary-centre or metropolitan consumers."
However, while perceptions of the long-term economic outlook were reaching new heights of optimism, Ms Purdue cautioned there were more immediate issues at hand constraining consumers.
"Despite the high level of confidence, the temptation is to downplay the implications of this survey for consumer spending, especially given the considerable hurdles of high household debt, tighter credit and rising unemployment," she said.
The other major movement registered in the survey was the change in consumers' assessment of their financial position in one year's time, with 24% anticipating the next quarter would be more profitable, compared with just 13% with such a view in the previous quarter.
"The strength of this result is surprising given our expectations that unemployment will edge higher over the coming year, thus contributing to slower wage growth, and suggests that the turnaround in the housing market, and the economy generally, is playing a part," Ms Purdue said.
She said other gains in the survey were "more muted" and painted a more "sobering" picture, with 22% of respondents saying they remained worse off than a year ago and only 19%, a four-point jump, saying now was a good time to buy major household items.
