Shoppers remain cautious as Christmas approaches
By JAMES WEIR The Dominion Post | Monday, 23 Nov 2009
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TIGHT TIMES: While consumers are confident things will get better in future, they are much less confident about the present.

The Christmas shopping rush is likely to be late and retailers will need to discount heavily to make sales, with shoppers still cautious, according to a consumer confidence survey.

"The competition will be pretty fierce for the shopper's dollar this Christmas," said ANZ Bank chief economist Cameron Bagrie. Consumers were only cautiously optimistic.

The latest ANZ-Roy Morgan survey shows overall confidence down 4.4 points in November, to 121.5, breaking a four month run of rising spirits. A figure above 100 indicates optimists outnumber pessimists. Aucklanders remain the most confident, but confidence in Wellington slumped 8.1 points in the month to about 120, reflecting concerns about public service job cuts, Mr Bagrie said.

The overall index combines the answers to five questions.

The answers show most people are worse off financially than a year ago, but a clear majority expect to be better off a year from now, with an improving economy in the next year and over the next five years.

Almost half of those surveyed thought it was a good time to buy a big household item.

While consumers are confident things will get better in future, they are much less confident about the present.

The survey's current conditions index, which has been a leading gauge for spending, remained below the key 100 point benchmark, falling 4.1 points to 94.2 in November.

"This suggests consumers will remain cautious about spending decisions heading into the all important holiday shopping season," Mr Bagrie said.

In sharp contrast, the future conditions index remained high at almost 140 points, but also dipped about 4 points in the month.

Mr Bagrie said there was a wide gap between present conditions and expectations because of the long, drawn out recession which began at the start of 2008 and had only recently reached a turning point.

"After tough times, people think it has got to be better, because it surely can't be any worse," he said.

But the optimism remained cautious. The global economy had steadied, the forecast Fonterra payout to farmers was up and the housing market had bounced back. Tourist numbers were also up on a year ago.

But Kiwis were still carrying a large amount of debt, mortgage interest rates had moved up and the job market remained weak with rising unemployment.