Consumer confidence fell in June but Westpac senior economist Michael Gordon says there is no obviously political slant to the survey.
The Westpac McDermott Miller Consumer Confidence Survey showed confidence fell 2.6 points to 108.6 in June, taking it to slightly below its long-term average. The drop in confidence was widespread and was consistent with the recent signs the edge had come off the economy, he said.
Confidence initially fell after last year's election, suggesting consumers were apprehensive about how the new Government would work out. Much of the fall had been reversed by March.
“What's more, the initial post-election reaction was mixed across household types. Some were expecting to do better and some worse under the new Government.”
In contrast, the drop in the June survey was widespread and confidence was down across most regions, age groups and income levels. The widespread fall reinforced evidence the edge had come off the economy in response to a slowing housing market, Gordon said.
The pace of growth slowed in the second half of last year. GDP figures released yesterday were expected to show a further cooling in the March quarter.
“The drop in confidence hasn't been particularly large to date. That speaks to more of a general malaise among households, rather than specific worries about the direction the economy is heading.”
Confidence was down in terms of both households' own financial position and their views on the overall economy, he said.
There was a particularly sharp drop in economic expectations for the year ahead, though that only placed the measure at a two-year low. The attitudes households had towards saving would be an important area to watch.
Gordon expected little in the way of capital gains on housing over the next few years as a result of the Government's housing policies and an eventual rise in interest rates.
Some households could be left feeling uncomfortable with the high levels of debt they were holding, relative to their incomes.
*Dene Mackenzie is business editor of the Otago Daily Times.