16 Feb 2013

Weak labour market restrains consumer confidence

8:49 am on 16 February 2013

Consumer confidence has hit its highest point in almost three years but this could be undermined by a weak labour market.

The ANZ-Roy Morgan consumer confidence index rose 2.7 points to 121 in February, a 32-month high. A reading above 100 shows optimism.

The result indicated people felt less worse off than a year ago.

Views on the general economy a year out have improved, but ANZ senior economist Mark Smith said the tepid labour market is restraining consumer confidence in terms of current conditions.

He said a large number of redundancies have been reported and job advertisements were flat over the last year and fell in January.

Mr Smith said the high New Zealand dollar is making imported goods appear cheaper, which is underpinning consumers views that it's still a good time to buy a major household item.

He said the key for the upturn is an improvement in the labour market.