Kiwis consumer pessimism eases again

Te Whanganui a Tara - For the second month in a row there has been a lessening in people's plans for cutting back on spending, New Zealand independent economist Tony Alexander says.

His latest survey found the just 11 percent of Kiwis were pessimistic about the economy compared with 18 percent last month and 27 percent in July.

Positive spending intentions range from home renovations, groceries, domestic and offshore travel, shares to wellbeing services.

For everything else spending plans are negative including for purchasing a house to live in, though again, this degree of negativity has now eased for two months running.

The improvement gels with indicators from my other monthly surveys of mortgage advisers and real estate agents which have also recorded some improvements.

But like those surveys, this one does not actually bespeak of economic improvement as yet, just less degradation.

That in itself however is significant because it tells us that although the worsening world growth outlook is legitimate cause for concern, the chances of recession in New Zealand are diminishing but not completely absent.

For most retailers the survey results suggest continued weak trading conditions as we head through spring into summer.

The desire to travel domestically remains strong as does the desire to travel offshore.

The initial surge in plans to get out of the country for a while has ended, and recent changes tell us that no rising or falling trend is obviously in place.

Plans for undertaking home renovations have improved for the third month in a row and this is a very interesting development.

Alexander says that with the binge on buying consumer durable goods during the pandemic ending, interest rates rising, and household wealth falling, that people would be putting off home renovation plans.

Desires to undertake renovations are certainly substantially lower than during the pandemic.

But the recovery reminds us that not everyone has their spending plans driven by housing wealth and borrowing costs.

Bank balances are 21 percent above levels at the end of 2019, the labour market is very strong, and there are likely to be people engaging now who stepped back from renovations earlier because of the frenzy underway previously and soaring quotes for work.

He says a net 10 percent of people plan cutting spending on motor vehicles. This is the least negative reading since February, but it is still negative.

A net 14 percent of people plan cutting spending on furniture and appliances.