The present conditions index was similar, falling 14.4 points from 87.9 to 73.5. The measure’s 10-year average is also more pessimistic than optimistic, sitting at 94.2 points.
The expected conditions index also fell, down 14.2 points from 99.2 to 85. The measure was the only one to record a positive average of 101 over the past 10 years.
Westpac senior economist Satish Ranchhod said there was finally some positive news emerging on the global stage.
Despite the downturn, Westpac senior economist Satish Ranchhod pointed out that the survey had been conducted in the first two weeks of June, before serious international developments had occurred.
“Earlier this week President Trump announced that an agreement has been reached to extend the ceasefire with Iran and open the Strait of Hormuz. Assuming the agreement holds, disruptions to oil markets, global shipping and supply chains will take time to ease,” Ranchhod said.
“However, oil prices have already started to drop back and, if this continues, it could pave the way for a recovery in confidence and firming in economic activity through the back part of the year.”
Outlook worsens
Other measures in the survey also took a negative turn, with perceptions of respondents’ current financial situations falling further behind, dropping 11.1 points from -23.8 to -34.9.
Respondents’ expected financial situations fell into negative territory, down 12.3 points from 1.9 to -10.4.
The one-year economic outlook recorded the largest decrease, falling 20.4 points from -11.6 to -32, the most pessimistic result in three years. The 10-year average for this measure is -10.3.
Ranchhod said the drop in confidence had been seen across all age groups, but had been more pronounced among those aged under 50.
“Confidence is also down across all income brackets. The largest falls have been seen among those households earning between $70,000 and $100,000 per annum.”
The five-year economic outlook was no better, falling 9.7 points from 7.3 to -2.4. The 10-year average for this measure is 8.6.
As for whether it is a good time to buy a major household item, the measure fell 17.7 points from -0.5 to -18.2.
Ranchhod said households had become much more cautious about their discretionary spending.
“A net 38% of households told us they’ve cut back their spending on dining out and other entertainment activities. That’s the weakest result since 1991, and echoes the reports of tough trading conditions from many hospitality operators in recent months.
“Households have also told us that they’re more cautious about making a major purchase for the home. Despite that, spending on furnishings and other household durables has actually held up in recent months.”
He said with petrol prices dropping back again, hospitality spending could pick up over the coming months.
Regional wrap-up
Wellington remains the most pessimistic part of the country, with consumer confidence sitting at 74.2, down from 88.2 in the March quarter.
Ranchhod said in addition to the rise in living costs, the nation’s capital is continuing to see softness in its jobs market.
“Announced public sector job losses will also be a concern for many in the region. Businesses we’ve spoken to in Wellington recently have reported weak trading conditions.”
Wellington was not alone, however, with all other regions also reporting a drop in confidence.
Consumer confidence in Auckland fell from 100.7 in the March quarter to 83.8, the most positive region, with Canterbury right behind, falling from 90.6 to 83.2.
Otago reported the sharpest quarter-on-quarter decline, falling 23.3 points from 93.3 to 73.0.
Ranchhod said while strong export prices were helping support economic conditions in the region, the outlook for international tourism and hospitality exports had darkened in recent months.
Tom Raynel is a multimedia business journalist for the Herald, covering small business, retail and tourism.
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