Consumer confidence slipped below the 100 level in the March quarter but is still above the June 2008 low of 81.75, the latest Westpac McDermott Miller consumer confidence survey shows.
Westpac senior economist Donna Purdue said the index fell to 96 in March from 101.3 in December.
"Nevertheless, at current levels, confidence remains well above the low reached in June last year, when high interest rates, rising petrol prices and other cost pressures were putting the squeeze on consumers."
An index number above 100 indicates there are more optimists than pessimists, and a number below 100 indicates there are more pessimists than optimists. The margin of error is 2.5%.
Otago's confidence fell 10.8 points in the quarter to be 93.4, the second-lowest region after Southland, on 93.8.
"Confidence has remained remarkably resilient, given the sheer volume of negative news consumers have been bombarded with in recent months. It has been virtually impossible to escape the bad news from offshore, with nearly every day bringing another tale of woe from one of our major trading partners," Mrs Purdue said.
The news from within New Zealand had been far less sensational, but it had still been disturbing. That raised the question as to whether New Zealand consumers were being staunch or whether they were in denial.
When compared internationally, New Zealand consumers appeared to be less pessimistic than most, she said.
Confidence among United States consumers was at a "mind-bogglingly low" of 56.6 while in Australia the index was 85.6.
There were several plausible explanations as to why New Zealand consumers were not suffering such a bad case of depression.
They included the traction policy-makers were getting from monetary and fiscal stimulus, the relatively low exposure New Zealand households had to financial assets and the mild correction in the country's housing market relative to the experience in the US, United Kingdom and much of Europe, Mrs Purdue said.
Westpac believed that the domestic data would disappoint the Reserve Bank and fail to support the central bank's story of a recovery in growth in the second half of the year.
The recent strength in the New Zealand dollar, if sustained, implied more work on interest rates if the Reserve Bank was to achieve easier monetary conditions.
"We remain of the view that the official cash rate will reach 2% by the middle of this year," she said.
The facts-
• NZ consumer confidence - 96 points
• US consumer confidence - 56.6 points
• Australia consumer confidence - 85.6
• Otago consumer confidence - 93.4
(Confidence low but not all bad)
