Wednesday 12th June 2019
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Consumers pulled back on credit and debit car spending in May after holidays in April fuelled a rise.
Seasonally-adjusted electronic card spending fell 0.5 percent in May after rising 0.6 percent in April. Core retail spending, excluding fuel and vehicle spending, also fell 0.5 percent following a 0.4 percent lift in April when people took advantage of the extended holiday period, which included Easter and school holidays, to travel domestically and eat out more.
ASB Bank senior economist Mark Smith said the data was "considerably weaker than market expectations." Economists polled by Bloomberg had expected a 0.5 percent rise.
"Card spending has slowed over the last three months," said Stats NZ retail statistics manager Sue Chapman. "Since February 2019 we have seen relatively softer growth in the retail industries indicating an easing in domestic spending."
Softer growth in household spending was one of the factors the Reserve Bank's monetary policy committee mentioned when it cut the official cash rate by 25 basis points to a record low 1.5 percent at the May review.
"The members agreed that given the recent weaker domestic spending, and projected ongoing growth and employment headwinds, there was a need for further monetary stimulus to meet its objectives," according to a summary record of the meeting included in the monetary policy statement.
ASB's Smith said, however, he still expects a "moderate rate of consumer spending growth going forward." He said government support for low-income families, low interest rates, record-high levels of residential construction activity, strong tourism inflows and low unemployment are supportive of retail spending.
However, "soft wage growth, cooling employment growth, high fuel prices and a weak Auckland housing market backdrop will likely limit the overall pace of NZ retail spending growth going forward."
Spending on consumables fell 0.4 percent, or $9 million, in May to $2.04 billion while spending on hospitality was unchanged at $1.08 billion.
May spending on durables - which include electronics, whiteware, hardware, and furniture - fell 0.8 percent or $10 million to $1.3 billion. Spending on apparel was down $4.7 million, or 1.5 percent, to $302 million while fuel spending dipped 0.4 percent, or $2.6 million, to $604 million.
In actual terms, cardholders made 151 million transactions across all industries in May, up from 144 million in April. The average value was $49, unchanged from the prior month.
Total actual retail spending using electronic cards was $5.39 billion, versus $5.33 billion in April, and was 3.2 percent higher than in May 2018. Core retail spending was $4.6 billion versus $4.58 billion a month earlier. On the year it was up 4.6 percent.
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