Consumers are becoming increasingly nervous about the overall economic outlook, however, many are not yet worried about being personally affected.
Photo: RNZ / Rebekah Parsons-King
The Westpac McDermott-Miller Consumer Confidence index fell 5.7 points in March, reversing the rise seen late last year.
It leaves the index below at below average levels, but still remains optimistic at 104.2.
An index number over 100 indicates that optimists outnumber pessimists.
Westpac senior economist Satish Ranchhod said the survey, conducted between 1-10 March, provided an early reading of consumer sentiment, but did predate the stringent travel restrictions.
"Given the headwinds confronting the New Zealand economy, the drop in consumer confidence has actually been fairly modest," he said.
"Households are feeling nervous about the economic outlook over the year ahead. But at least at this stage they don't appear too worried about how they will personally be affected."
Ranchhod said the broader nervousness had weighed on consumers' spending appetites.
"The number of households who think now is a good time to purchase a major household item has fallen to its lowest level since 2008, when the New Zealand economy was in the depths of the global financial crisis.
"That's particularly notable given the firming in the housing market over the past year, which tends to be a big driver of spending, especially on durable items like household furnishings."
Ranchhod said while spending on leisure and entertainment had not yet been affected, that would likely change with people taking more 'social-distancing' measures.
He said it was likely confidence would continue to fall.
"It wouldn't be surprising to see a further fall in household confidence, and a related drop in spending. Household spending could be particularly hard hit if unemployment increases - as we expect it will - or if health concerns prompt households to avoid social situations."
