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Bright-eyed young Kiwis most optimistic of consumers

Most optimistic about the year ahead are Kiwis in the 18-29 age bracket, who foresee better economic times ahead at home and globally, according to the latest Westpac McDermott Miller Consumer Confidence Index.

Most optimistic about the year ahead are Kiwis in the 18-29 age bracket, who foresee better economic times ahead at home and globally, according to the latest Westpac McDermott Miller Consumer Confidence Index.

The index remained unchanged at 112 in the September quarter, which indicates optimists outnumber pessimists, but those in the youngest age bracket bucked the trend and climbed 15.8 points to 126.4.

"Consumers have remained optimistic for two quarters in a row," said Richard Miller, managing director of planning consultancy McDermott Miller.

"Some 42 percent of 18-to-29 year olds think New Zealand will have mainly good economic times over the next 12 months, compared to only 32 percent of all consumers, and 63 percent of 18-to-29 year olds think New Zealand will have mainly good economic times over the next five years."

The main reasons given were that the recession will have less impact (16 percent), economic policies and tax cuts will have a positive effect (13 percent), and global economic conditions will improve (12 percent).

Metropolitan consumers, especially in Auckland, also cited major tourism events as a reason for their optimism.

"New Zealand households continue to turn their focus to recovery," said Westpac chief economist Dominick Stephens.

"While they remain cautious about their personal financial situation, they are becoming increasingly confident that economic prospects will improve over the coming year. Along with other recent business and consumer surveys, that bodes well for an ongoing gradual expansion in domestic spending."

Households' assessment of their current financial situation deteriorated slightly, and remains pessimistic on the whole. However, a larger number now think is a good time to buy a major household item (a net 30.1 percent, up from 26 percent in June).

While the near-term economic outlook continued to improve, with a net 2.1 percent (down from 6.7 percent) now pessimistic about the economy's prospects over the coming year, the outlook for the next five years dipped sharply, from 50 percent June to 41.2 percent.

"The survey did show a drop-off in longer-term economic confidence," Stephen said.

"This could be a reflection of some of the recent bad news we've had around the global economy, or the fact that we're starting to see some of the longer-run costs associated with the Christchurch earthquake, such as upward pressure on insurance premia. But long-term economic optimism remains historically high and overall, today's data show confidence remaining on track."