With the social and economic impacts of COVID-19 continuing to bite into our lives, New Zealanders are not sure what the future holds.
The ANZ-Roy Morgan Consumer Confidence Index seems to bounce and wobble every month – indicating how unsure we are of the “new norm” of COVID-19 living.
However, the latest Index shows that consumer confidence lifted 9 points in October, with the current and future conditions indexes lifting by similar amounts.
But it’s still way behind where we were pre-pandemic.
Some households believe it’s a good time to buy major household items. Purchasing confidence went up 12 points in October, compared to the previous month but it’s still in recession mode and the retail sector, especially, still has a cloud over it. Consumers are feeling a little bit more confident about the current financial situation but are still cautious about spending.
Contrary to all this is the housing boom with house prices rapidly rising throughout the country. Economists are unsure about this phenomenon as job and income losses still dominate our thinking. Those who are in the higher income brackets or cashed up are using that money to buy bigger properties, upgrading their homes (builders are flat out) or purchasing investment properties.
However, for the more vulnerable parts of our community the recession will continue to hurt for some time and just putting food on the table is their focus. Buying a house seems beyond them.
“The pandemic has seen a new phenomenon: more and more people turning to the internet for their purchases. ”
So what country is the most confident?
The impact of the pandemic and its effect on different countries is reflected in the country’s consumer confidence.
The always confident Australians, despite their Victorian COVID-19 hiccup, have some of the highest confidence readings in the world. The Westpac-McDermott Miller Consumer Confidence Index for the third quarter of 2020 shows Australia reading 108 points, compared to 105 for the previous quarter.
We are not far behind – 95.1 (a drop from 97.2 for the previous quarter).
The Americans remain fairly confident (this doesn’t take in the shambolic US election) with 81.8 (80.4 previously).
It’s all downhill for other major countries, with many hitting minus readings. The European Union is -16.5 (-14.9 previously), with UK consumer confidence really in the doldrums at -31 (-30 previously).
Are New Zealand businesses feeling more confident?
The consumer measurements reflect business sentiment, which has, not surprisingly, equally gone up and down like a yo-yo in these uncertain times of lockdowns and resurgence of COVID-19 community cases.
The good news is that business confidence showed a solid increase in October, compared to the previous month, according to the ANZ Business Confidence Index. Investment and employment intentions and profit expectations are at present stable. This was helped slightly by the General Elections being completed and the business community feeling it could roll up its sleeves and try to make sense of what is to come next year.
Construction is the most optimistic sector at present, according to ANZ. But agriculture and the retail sector are less confident.
The pandemic has seen a new phenomenon: more and more people turning to the internet for their purchases. The future could be one of digital shops and less bricks and mortar. This has seen some retailers more optimistic about the future as they get to their stay-at-home customers in new ways.
Hospitality, not surprisingly, was the hardest hit but with the lifting of lockdowns many businesses are now feeling they will be able to recover in the new year.
The tourism sector has been buoyed by Kiwis deciding (or rather they have no alternative) to see their own country. The fully-booked summer holiday period has seen the tourism industry sigh with relief but it’s not confident how long this will last without overseas tourists coming here.
ANZ warns it expects the economy to hit tougher times into next year as the wage subsidy and mortgage deferment scheme roll off. However, the bank optimistically points out its latest survey is “looking hearteningly robust”.
Kiwi small businesses – the backbone of the New Zealand economy – almost shuddered to a halt when the pandemic struck. The lockdown restrictions, which still loom over us as we anxiously check the daily COVID-19 cases, seemed to be a mortal blow to some sectors. Some businesses have gone to the wall. But many have adapted well to the new world. Others have bunkered down, making plans and looking to a better future.
With consumer confidence still low but at the least, for now, stable Kiwis, always a reliant breed, see some light at the end of the tunnel. We know it’s not going to be easy and it may be a long haul. But, like we shook ourselves off after the Christchurch-Kaikoura earthquakes and got on with it, we will, undoubtedly, come out of these uncertain times an even stronger country.
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