N.Z consumer confidence up, despite global woes

Consumer confidence in New Zealand defied expectations to rise slightly in August, despite the turmoil engulfing world markets, a survey released Thursday showed. The ANZ-Roy Morgan New Zealand consumer confidence index rose 3.9 points to 113.3 points in August in a result ANZ economist Khoon Goh said showed surprising optimism about New Zealand's economic prospects. A figure above 100 represents optimism, while one below represents pessimism. Goh said the survey conducted from July 25-August 7 coincided with a rash of negative developments in offshore markets, including the political wrangling that led to the US credit rating downgrade and Europe's sovereign debt crisis. "Given such a backdrop, one would have expected consumer confidence to have taken a knock," Goh said. "The fact that it managed to rise shows that New Zealand consumers are largely brushing off offshore woes, for now anyway." He said figures released last week showing that New Zealand's unemployment rate remained steady at 6.5 percent in the April-June quarter were most likely responsible for consumers' upbeat assessment of the economy. "Given that the New Zealand equity market has taken a beating and house prices nationally are not really going anywhere, this leaves an improving jobs market as the most likely candidate for explaining the rise in confidence," he said. While the labour market has proved resilient, other economic data from New Zealand in recent months has indicated the farm-based economy is struggling to shake off the impact of a lengthy recession that ended in mid-2009. The inflation rate hit a 21-year high of 5.3 percent in the 12 months to June, as rising fuel and food prices pushed up the cost of living, while economic growth in the year to March was a modest 1.5 percent. New Zealand is also rebuilding its second largest city, Christchurch, after a devastating earthquake in February killed 181 people, with the cost estimated to reach NZ$15 billion ($12.3 billion).