Tuesday 10th September 2019
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New Zealanders look to have heeded Reserve Bank governor Adrian Orr’s advice in August and headed out to spend.
Seasonally adjusted electronic card spending lifted 1.1 percent in August after falling 0.1 percent in July. Economists polled by Bloomberg had expected a lift of 0.5 percent.
Core retail spending, excluding fuel and vehicle purchases, lifted 1.3 percent after falling 0.4 percent in July.
The central bank cut rates by 50 basis points to a record low 1.0 percent on Aug. 7 and Orr called on consumers to spend more and businesses to invest more.
“Consumers look to have heeded the RBNZ’s advice to go out and spend, but we remain sceptical as to how long this retail resilience will last," ASB senior economist Mark Smith said.
Fuel was the only retail industry to show a decline, falling 1.4 percent or $8 million to $581 million after lifting 3.2 percent in August.
Lower fuel prices likely helped spur the spending, “however, the solid 1.3 percent rise in core points to a more substantial pick-up in spending appetites,” Westpac senior economist Satish Ranchhod said.
Ranchhod said it’s not obvious whether the rate cut boosted spending in August but “we do expect that the related falls in mortgage rates will help to support spending over the coming year.”
The largest increase in spending was on durables, including hardware, furniture and appliances, which rose $23 million or 1.7 percent. Consumables, including groceries and liquor, were up $16 million or 0.8 percent. Hospitality spending also lifted $16 million or 1.5 percent.
Spending in the apparel industry rose 4.5 percent or $13 million after falling in July.
In actual terms, retail spending on electronic cards was $5.35 billion in August, up 2.8 percent or $147 million versus the same month a year earlier.
Core retail spending was $4.59 billion, up 5 percent from a year earlier.
Cardholders made 150 million transactions across all industries in August with an average value of $49 per transaction.
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