The ANZ-Roy Morgan NZ consumer confidence index in New Zealand rose 2.2 points to 123.9 in May. Australian consumer confidence is 109 and falling.
Cheaper petrol and a rising Kiwi are also encouraging spending. Australian retail sales meanwhile are moribund. There are clouds on the NZ horizon, not all long and white. The May budget will take the economic pulse of the country; there’s a general election in September and elections always fog the outlook.
Overall though, research generally shows NZers think the economy is on the right track but there's increasing concern about the cost of housing, immigration and growing inequality.
In Australia, the paradox for economists is business is actually becoming more optimistic but their staff and customers are becoming less.
According to ANZ Research, the contrast in the Australian economic data between the strength of business sentiment and the weakness in consumer confidence is becoming pronounced.
“While the two are typically correlated, the current divergence is not unprecedented – though it is approaching the lower end of the range,” ANZ economists say.
There are potentially worrying implications from the anomaly.
“Given they are useful leading indicators, is there anything we can say about how gaps between the two are typically closed?” the economists asked. “For instance, is it the case that business conditions usually drop towards consumer sentiment when the latter is much lower than the former?”
“If it is, then the current low level of consumer confidence implies a sharp weakening in business conditions in coming months. This would challenge our expectation of a gradual improvement in the labour market.”
Australian wages continue to rise more slowly than inflation: annual wage growth for the March quarter coming was 1.9 per cent compared with inflation at 2.1 per cent – meaning real wages went backwards for the first time since June 2014. The story was worse for private sector wage growth - at 1.79 per cent it was the lowest on record.
More happily, ANZ argues the strong business sentiment, coupled with rising headline employment, should actually flow through to improving labour markets and expectations about wages – eventually pushing up consumer sentiment.
“We think this pattern is likely to play out over the next few months, with a better performing labour market leading to a stabilisation followed by recovery in consumer sentiment,” ANZ says.
Yet the disparity in mood on the two sides of the ditch runs deeper than the economic stats.
It’s something Tony Mitchelmore, a principal of qualitative market research firm Visibility Consulting, has been watching for some time.
Enduring themes, evident since the mid-90s, are an Aussie sense of entitlement in contrast with a Kiwi mentality of having a crack and accepting the need to compromise and strive.
Highly regarded The Australian Financial Review political editor Laura Tingle explored the theme in depth in her essay “Great Expectations”, analysing a mood which stretches back decades but accelerated with the John Howard years and subsequent governments playing the ‘it’s not your fault’ populist tune.
“Australians have become in effect a nation of whingers; New Zealanders just get on with it,” Mitchelmore says, drawing on a constant base of focus groups.
However he stresses there is more nuance to the story: “I think what it also reflects is higher aspiration in Australia, a frustration around wanting to achieve more.”
“New Zealanders appear more content with their lot – but they continue to perceive Australia as a land of opportunity.”
Mitchelmore’s research suggests the disparity between business and consumer sentiment in Australia probably reflects differing degrees of understanding of the issues: business tends to look at the data and evidence more closely – and that’s looking better – while the general public is immersed in the popular and social media – where negativity is the prevailing tone.
“Australians see the cost of living rising, they’re worried about stagnation in their fortunes and in the country politically, they’re frustrated,” he says. “They’re afraid permanent jobs are disappearing. Business tends to be more rational, less emotional.”
In contrast New Zealand consumers since the global financial crisis and during the era of Prime Minister John Key have become more optimistic – and indeed there is a correlation between the strength of the New Zealand dollar and consumer confidence. (Even though cheaper imports are offset economically by the pain for the country’s export-led economy.)