16 Dec 2013

High consumer confidence bodes well for Christmas trading

8:47 am on 16 December 2013

Consumer confidence has hit a near four-year high in the lead up to Christmas, signalling a good start to the festive season for retailers.

North City Plaza shopping mall in Porirua.

North City Plaza shopping mall in Porirua. Photo: PHOTO NZ

The monthly ANZ Roy Morgan Consumer Confidence index edged up 1 point to 129.4 in December - its highest level since January 2010. A reading above 100 indicates optimism.

It shows consumers are still positive about their financial prospects in the year ahead and consider this a good time to buy a major household item.

ANZ chief economist Cameron Bagrie says this is in line with recent data about retail sales, and bodes well for Christmas trading.

He says the economy is expected to grow for another six to 12 months, and that will contribute to people's feeling of financial well being.

Mr Bagrie says the employment market is starting to move up, asset prices are still strong, interest rates are still low, commodity prices are high and the construction market is starting to improve.

He says there are still some economic challenges including the fact household balances are still a bit weak, the currency is still high and the Government is not spending much.

But Mr Bagrie says the economy has moved beyond a recovery stage into self-sustaining economic expansion.

Combining ANZ business and consumer confidence surveys indicates the economy will grow by more than 5% by early next year, although the bank's economists are sceptical that can be achieved.