- Felix Delbruck, senior economist at Westpac
New Zealand consumer confidence dropped in the second quarter to the lowest level in more than two years, as falling dairy prices weighed on the outlook of the nation's economy. The Westpac McDermott Miller Consumer Confidence Index slid to 113 in the three months through June 30, down from 117.4 in the first quarter, reaching the lowest level since March 2013. An index reading above 100 signals optimists outnumber pessimists, while the historical average stands at 111.5. Consumers appeared to be more upbeat about present conditions, with the measure climbing 1.9 points to 115.1, though they were more pessimistic about the future, with the expected conditions index plunging 8.5 points to 111.6, below the historical average of 113.6. The deterioration on consumer confidence came against the backdrop of falling dairy prices, which have plummeted more than 50% from a peak in early 2014. Such a precipitous decline is expected to wipe around $7 billion from the New Zealand economy, according to the RBNZ's projections.
Despite consumers becoming increasingly wary about the economic outlook, they were not planning to cut back spending. The net percentage saying it was a good time to purchase a major household item increased from 27.8% to 28.8%, and those who said they were better off financially over the last year climbed from a net -1.4% to 1.4%.
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