The Westpac - McDermott Miller Consumer Confidence Survey is carried out on a quarterly basis by McDermott Miller's Market Research Unit. The Survey is under the joint sponsorship of Westpac and McDermott Miller Limited.

Between June 1988 and June 1990 the quarterly survey of consumer confidence and index was publicly released as part of the Dominion-United National Economic Review in the Dominion Sunday Times and The Dominion newspapers. Since December 1990, the survey has been released universally to the news media.

The Westpac - McDermott Miller Consumer Confidence Surveys are conducted, directed, analysed and reported on by McDermott Miller.

THE NATURE OF THE INDEX

Quarterly surveys of consumer confidence in New Zealand were initiated in June 1988 by McDermott Miller.

The Index of Consumer Sentiment was developed after World War II at the University of Michigan Survey Research Centre, in the United States, to improve economic forecasting under conditions of uncertainty and disruption. It has proved to be a useful supplement to conventional measures of national economic performance, and a reliable indicator of consumer spending behaviour since first determined in the US in 1952, and in Australia in 1973.

The Consumer Confidence Index is based on five internationally standardised questions, originating from the US survey, answered by a random sample of at least 1,550 New Zealanders. Sufficient numbers are sampled from every region to derive both regional index figures and a national index.

A single index figure, derived from answers to five questions, summarises "consumer confidence". A score above 100 denotes more optimism than pessimism. A score below 100 denotes more pessimism than optimism. The range measures the relative strengths of these "sentiments". The five questions asked in building up the index cover consumers' personal financial circumstances, national economic expectations and attitudes to major purchases.

USE OF THE INDEX

The Westpac : McDermott Miller Consumer Confidence Survey and Index remains the only regionalised "demand" oriented economic indicator published outside official statistics and is the only available "leading" indicator of consumer spending and savings intentions.

The Index can be compared directly with the Australian Westpac-Melbourne Institute Index of Consumer Sentiment, published by the Melbourne Economic Research Institute over the last 18 years. It can also be compared with similar United States and European indices. The Index formula has not altered but the motivating reasons for consumer responses are now probed.

Since the Survey's inception, McDermott Miller have built up an extensive database on consumer sentiment and are able to interpret the index as a leading indicator of retail sales, housing demand, savings intentions and inflation expectations.