Retail spending on electronic cards in New Zealand dropped in August after rising in July. It declined 0.4 percent in sequential terms in the month, as compared with a 0.2 percent month-on-month rise in July. This was lower than consensus expectations. However, the figures are volatile, while the spending was up on a quarterly basis in August by 1.2 percent. This indicates that the pace continued to be in the broad range of 1.25 percent to 1.75 percent that has been seen for past 18 months now.
The weaker spending print was partially due to lower fuel retailing, which declined 0.4 percent in sequential terms in August, following a 4.4 percent fall in July. Retail petrol prices are estimated to have dropped around 2 percent in August, and hence the weakness is wildly in line with that, noted ANZ in a research report.
But the weaker spending was widespread. “Core” spending, which excludes motor vehicle related spending, fell 0.6 percent month-on-month in August, especially with a huge decline in hospitality spending that dropped 1.5 percent. Spending on apparel and consumables also declined in the month by 0.7 percent and 0.5 percent.
However, the fall in core spending is the first decline since April 2015. While the decline in hospitality spending was a main driver in the month, the quarterly rate of hospitality spending actually increased to 3.5 percent quarter-on-quarter, with annual growth rising strongly by 14 percent.
“While the Q2 Retail Trade Survey tested the notion somewhat, households are showing a degree of restraint in their spending patterns relative to other periods of housing exuberance. We expect that restraint to continue”, added ANZ.
