Monday 11th November 2019 |
Text too small? |
Spending on credit and debit cards fell for the first time in four months, with dearer petrol prices in October blamed for soaking up more of people's pay packets.
Statistics New Zealand figures show retail spending fell a seasonally adjusted 0.6 percent in October from the month before. Fuel spending rose 0.7 percent, and hospitality edged up 0.1 percent, the only two components to register increases in the month. They account for almost 30 percent of retail spending on electronic cards.
Spending on plastic cards had increased in the four previous months and economists had expected that trend to continue, forecasting a 0.4 percent increase.
"Despite very low mortgage interest rates, durable and vehicle spending have been flat since August. Higher petrol prices contributed to a 0.7 percent rise in fuel spending, which likely weighed on discretionary spending," ASB Bank economist Mark Smith said in a note.
Smith also noted the flat hospitality spending, even with the added impetus of late-night rugby matches during the rugby world cup in Japan.
The Reserve Bank is keen on households to take advantage of low interest rates to increase their spending, but also to invest their money in alternative assets to term deposits, which aren't offering very attractive rates in a global environment of cheaper finance.
Smith said signs of a concerted lift in consumer spending were inconclusive so far.
"While we expect consumer spending to eventually lift, the subpar short-term growth outlook and tightening credit conditions for non-housing lending is expected to increase labour market slack and dampen medium-term inflation," he said.
Actual retail spending was $5.77 billion in October, up 1.6 percent from the same month a year earlier, with spending vehicles and auto parts rising 5.7 percent to $187 million and hospitality up 5.5 percent at $1.11 billion. Spending on consumables rose 3.3 percent to $2.12 billion.
Spending on petrol was down 12.6 percent at $596 million from a year earlier, when pump prices were at record levels.
Satish Ranchhod, an economist at Westpac New Zealand, said even with the latest moderation, spending was tracking well above the first half of 2019.
"We expect that spending growth will continue to climb through the remainder of 2019 and into 2020, supported by the firming in the housing market and wage growth. However, today’s result indicates that the pace of such increases may still be moderate," he said in a note.
Total spending on electronic cards - which includes services and other non-retail industries - was at $7.99 billion in October, up 2.8 percent from a year earlier. The number of transactions rose 3.9 percent to 162 million.
(BusinessDesk)
No comments yet
Second St John withdrawal of labour takes effect tomorrow with further strikes likely
Sanford Appoints Independent Director
CRP ADVISES CLOSURE OF SHARE OFFER TO EXISTING INVESTOR
Devon Funds Morning Note - 14 August 2024
OCR 5.25% - Monetary restraint tempered as inflation converges on target
Consumers still need due diligence as new deposit takers emerge.
Woolworths strike: staff asked to dress up in Disney costumes for a week on their own dollar
Turners Invests in Quashed Online Insurance Platform
PGW Reports on Challenging Year
Arvida Announces Executive Team Changes