(Bloomberg) — New Zealand consumer confidence fell to a record low, mirroring a slump in business sentiment, as the central bank raises borrowing costs and predicts a recession next year.
(Bloomberg) — New Zealand consumer confidence fell to a record low, mirroring a slump in business sentiment, as the central bank raises borrowing costs and predicts a recession next year.
The December index of consumer confidence fell to 73.8 from 80.7 in November, ANZ Bank New Zealand said Wednesday in Wellington.
That’s the weakest since the series began in 2004. Yesterday, ANZ said its measure of business confidence also fell to a record low.
The Reserve Bank last month raised the Official Cash Rate by a record 75 basis points to 4.25% and projected the benchmark could rise to 5.5% next year as it seeks to regain control of inflation.
Most economists agree with the RBNZ that the economy will slide into recession next year as households stop spending.
“Consumer spending has been resilient, but we suspect that this may peter out as more households roll onto sharply higher mortgage rates, house prices continue to fall, and as labor demand pulls back,” said ANZ New Zealand Senior Economist Miles Workman.
“Interest rate increases certainly are biting, as demonstrated by negative house price inflation expectations, and the fact that whether it’s a good time to buy a major household item is lowest among households paying off a mortgage.”
A net 33% of consumers said it was a bad time to buy a major household item, according to ANZ’s survey.
A net 10% expect to be worse off in a year’s time.
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