Change of Government sees boost in consumer confidence for middle-income earners

Consumer confidence has risen to the highest level in nearly two years, with the new Government possibly playing a role the change of sentiment. 

But while confidence has picked up, it still remains below average. 

The Westpac McDermott Miller Consumer Confidence Index rose 8.7 points in December to a level of 88.9 – still well below the average of 109. 

Westpac said the rise is encouraging with confidence now at the highest level in nearly two years. 

Westpac senior economist Satish Ranchhod said an increasing number of New Zealanders expect the economy to strengthen over the coming year. They also expect their personal finances will improve over 2024. 

"We're starting to see some an easing in the powerful headwinds that have been buffeting the New Zealand economy," Ranchhod said. "Inflation has started to cool, with prices for some necessities easing back. There is also a growing expectation that we are at, or close to, the peak in interest rates. That will be welcome news for many households who have seen their finances squeezed over the past few years." 

The change of Government may also have helped boost confidence for middle income earners. 

"The new coalition Government is planning on introducing tax relief, with a focus on middle income families. Consistent with that, we've seen larger increases in confidence among those households earning between $30,000 and $70,000," the report said. 

Meanwhile, those on higher incomes reported more moderate increases in confidence and those earning less than $30,000 each year had very low confidence. 

"While New Zealand households are feeling a bit more optimistic, they aren't throwing their wallets open just yet," Ranchhod added. 

"Spending appetites remain weak going into the holiday shopping season." 

He said the number of households who think it's a good time to make a major purchase is still lingering close to all-time lows, while Kiwis are also cutting back their spending on leisure activities. 

Change of Government sees boost in consumer confidence for middle-income earners
Photo credit: Westpac McDermott Miller

Looking across the country, confidence has firmed in most regions. There have been sizeable increases in many regions which are continuing their recovery from the severe weather events earlier in the year such as Bay of Plenty and Hawke's Bay. 

Confidence remains low in Taranaki/Manawatū-Whanganui, Otago and Southland. 

Change of Government sees boost in consumer confidence for middle-income earners
Photo credit: Westpac McDermott Miller

When it comes to the different demographic regions, the survey found clear contrasts between men and women. Men's confidence jumped this quarter to 96.3 (up 10.2 points), while women jumped 7.1 percent to 81.8. 

It found close to half of women believe they are worse off financially than they were a year ago, compared with just over a third of men. 

"Looking ahead to next year, both men and women have similar expectations for their personal finances, with over a quarter expecting to be worse off. Men, however, are more optimistic than women about New Zealand’s short-term economic future, as well as the country's longer-term prospects," McDermott Miller Limited market research director Imogen Rendall said. 

Younger people were the most confident at 88, an increase of 5.2 points. Confidence amongst those aged 30-49 has increased the most, rising 11.1 points to 87.8.  

"While this is still pessimistic, this shift represents the highest index score for this age group in nearly two years," Rendall said. 

Those aged over 50-years-old have also seen an increase in confidence of 3.1 points to 84.8 – the highest score for this age group in two years.