Households Ready to Spend this Christmas
Strong Christmas sales are expected on both sides of the Tasman, with consumer confidence growing in Australia and steady in New Zealand. According to the latest figures from Roy Morgan Research, an increasing majority of households believe now is a good time to purchase white goods, entertainment products, electronics, and other major household items.
The Roy Morgan Consumer Confidence Rating in Australia rose to 120.1 points in the first week of December, up 1.3 points from the month before. Confidence grew on a number of levels, with respondents ready to spend while also more positive about their personal savings and overall financial situation. According to the report, 55 percent of Australians are keen to spend on major household items this Christmas, with only 17 percent saying it's a bad time to buy.
Interestingly, this rise in consumer confidence comes at the same time as a drop in the Australian dollar. According to Gary Morgan from Roy Morgan Research, "Just three weeks before Christmas, 55% of Australians are saying now is a 'good time to buy' major household items. The rise in consumer confidence comes as the Australian Dollar fell to a three-month low below 91US cents. The falling Australian Dollar will put upwards pressure on the prices of imported goods, though likely not impact heavily on the stock already available for Christmas."
While conditions look promising for healthy Christmas retail figures, according to Morgan, the RBA could have made things even better had it announced an interest rate cut at its final meeting of 2013: "To really provide an immediate boost to the Australian economy in the lead-up to Christmas, the RBA must cut Australia's interest rates. Australia's interest rates, at 2.5% are amongst the highest in the developed world and a reduction would provide the economy with a welcome boost."
Consumer confidence in New Zealand is also positive, recorded at 127.8 in mid-December. While this rating is down 0.4 points from the month before, it is still 10.1 points above the 2006 average of 117.7 and 1.7 points above the December average of 126.1. According to Roy Morgan Research, Christmas sales figures should also be healthy in New Zealand, with 59 percent of people saying its a good time to buy major household items and 26 percent saying the opposite.
In other key data from the report, 41 percent of Kiwis believe they are better off financially than a year ago, with 26 percent saying they are worse off. 45 percent are expecting things to improve over the next 12 months, with 23 percent expecting bad times ahead. Kiwis are even more optimistic about long term conditions, with 51 percent looking forward to better times over the next five years and only 20 percent expecting worse times. Regardless of what happens in 2014 and beyond, however, retailers on both sides of the Tasman will be hoping for sentiment to translate into good sales results over the holiday period.