- Cameron Bagrie, ANZ Bank New Zealand chief economist
Consumer confidence in New Zealand continued to weaken in August, falling for a fourth month in a row to the lowest level in three years, as sentiment waned on the prospects for the year ahead. The ANZ Roy Morgan consumer confidence index dropped to 109.8 in August, down from 113.9 in the previous month. Nevertheless, the index remained firmly above the 100-mark threshold, signalling optimism in consumers' mind-set. Expectations about the economy declined steeply this month, with the futures conditions index sliding to the lowest level in more than six years of 104.9 from 110.4. At the same time, the current conditions index declined to 117.2 from 119. A precipitous decline in global dairy prices caused milk processors to lower their forecast payout to dairy farmers to below the cost of production and forced some economists to revise down their expectations for economic growth in the coming year.
Despite the negative outlook for the economy, consumers felt better off financially than a year ago in August. Policymakers have attempted to underpin demand in recent months, with the Reserve Bank of New Zealand slashing interest rates twice since June, and predicted to cut again when the bank meets next month. Most economists expect the Official Cash Rate (OCR) to be at 2.5% by the end of the year, down from 3.0% at the moment.
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