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13 February 2006
Auckland
According to a survey conducted by ACNielsen at the end of 2005, New Zealanders were reported to be among the most confident globally about spending any spare cash after paying for essential living expenses. However ACNielsen experts warn that as business prospects tumble and interest rates increase, Kiwis may soon start to think twice before they get out their wallet.
The ACNielsen Consumer Confidence Online survey conducted in November 2005 reported New Zealand as one of the most optimistic about its economy. The survey indicated that over 60 percent of Kiwis considered it was either an Excellent (6 percent) or Good (55 percent) time to spend, considering the cost of living and their own personal finance situation.
Out of Home Entertainment came near the top of the Kiwis' spending list, with nearly 35 percent of respondents claiming they would like to spend spare cash in this way. Other hot items included Holiday/Vacation (34 percent), New Technology (30 percent), New Clothes (30 percent) and Home Improvement/Decorating (25 percent).
Steve Mitchell, ACNielsen's Managing Director, commenting on the results, said "The strong spending intention was justified at that time, considering the buoyancy in the financial situation and job prospects at the end of last year".
The almost full employment rate in 2005 and generally increasing personal incomes appear to have contributed to strong consumer confidence at that time, Mitchell said. ACNielsen's survey indicated that in November nearly 85 percent of Kiwis thought that job prospects were either "Excellent" (19 percent) or "Good" (65 percent), making New Zealand the second most confident about employment in the Asia Pacific region. India topped the region by having over 90 percent of people expressing confidence about their job prospects.
When asked about perceptions about their personal finance situation, over 10 percent of Kiwis claimed it to be "Excellent", and up to 70 percent said it was "Good", again making New Zealand the second most optimistic in the region behind India.
However signs are emerging in recent months that point to a different direction, Mitchell warned. As people feel the pinch of high interest rates, spending may slow down as a consequence.
Recent announcements about redundancies attributed to the high exchange rate may dampen the confidence about job prospects, Mitchell commented.
New Zealanders have a low rate of savings, and the survey indicates this will continue with New Zealand ranking second lowest across Asia Pacific in their intention to save money. About 45 percent of Kiwis in ACNielsen's survey claimed they would like to "put spare cash into savings" after covering life essentials. Meanwhile increases in household debt appear to be starting to bite, with almost half claiming they would use spare money to pay off debts.
Recent reports of the dip in confidence about business prospects - especially amongst export companies - are affecting consumer confidence as well, according to Mitchell.
When asked about immediate concerns, the Economy and Health were the top concerns for New Zealanders. Up to 21 percent of respondents claimed the Economy to be their biggest concern, and for 22 percent it was their second biggest concern. The percentages for Health as the biggest and second biggest concerns were 20 percent and 23 percent respectively.
Up to now Kiwis are still spending, but they may soon start to tighten their belts, Mitchell observed.
About ACNielsen
ACNielsen, a VNU business, is the world's leading marketing information provider. Offering services in more than 100 countries, the unit provides measurement and analysis of marketplace dynamics and consumer attitudes and behavior. Clients rely on ACNielsen's market research, proprietary products, analytical tools and professional service to understand competitive performance, to uncover new opportunities and to raise the profitability of their marketing and sales campaigns. To learn more, visit www.acnielsen.com.
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