Consumers lose confidence in recovery

Rising petrol prices, higher mortgage rates, falling house prices and worsening unemployment are knocking back consumer confidence.

The Westpac McDermott Miller Consumer Confidence Index fell slightly in the March 2010 quarter, to 114.7 from 116.9.

An index number over 100 shows more optimists than pessimists, while a number under 100 indicates that pessimists outnumber optimists.

“Not much has gone the consumer’s way in recent months. Interest rates and petrol prices are up, unemployment has worsened, and house prices are falling again,” Westpac chief economist Brendan O’Donovan said.

“People are still optimistic about the recovery, but less so than last quarter,”

The Future Conditions Index dropped to 124.7 from 128.8 in December 2009 in the survey.

Consumers remained deeply pessimistic about their own financial situation. A net 22 per cent of respondents said they were worse off than a year ago, compared to 21 per cent last quarter.

The only part of the survey to show improvement was consumers’ assessment of whether now was a good time to buy a major household item, with a net 21 per cent saying yes.

“The high exchange rate is about the only thing that worked in consumers’ favour recently, by driving down prices of many goods, including cars and appliances,” Mr O’Donovan said.

- © Fairfax NZ News