Households keep purse strings tight
Kiwis have their feet firmly on the spending brakes, latest eftpos and credit card data shows.
Wary shoppers have put an end to the card spending growth of the first half of the year, but spending is still up year on year.
Statistics New Zealand said the amount spent on cards last month in core retail sectors - excluding fuel and vehicle-related sales - fell a seasonally adjusted 0.9 per cent last month, compared to August.
Reversing August's strong result, all four core retail industries saw spending decrease last month.
The consumables sector - which includes food and liquor retailing - copped the biggest blow, down 0.6 per cent or $10 million.
Deutsche Bank senior economist Darren Gibbs said the results were consistent with an expected "sharp pull-back in growth in the third quarter".
Card spending in core retail in the three months ending September had risen by just 0.2 per cent, compared with growth of 1.8 per cent in the June quarter, he said, but September card spending was still 2.4 per cent higher year on year.
Matt Nolan, an economist with Infometrics, said a rebound in fuel prices, with unleaded petrol prices up 8.3 per cent from their July average, would have been a major driver behind the recent drop in spending.
But fuel prices were not solely to blame.
"We are seeing households reluctant to increase spending due to weak wage growth and still-elevated unemployment - which is reducing perceived job security."
Spending in provincial regions - which had been "a pillar of support for the retail sector" - would also decline, given farmers' expected payouts had been pinched by falling commodity prices.
ASB's Christina Leung said retail spending was gradually recovering.
Although durables spending slipped last month, it was still 2.8 per cent up year on year - suggesting increased consumer confidence.
The third quarter NZIER quarterly survey of business opinion released yesterday indicated retailers were feeling optimistic about the sales outlook, particularly in Auckland, she said.
But there would still be headwinds keeping spending at bay, including the patchy recovery in the labour market, high household debt and continued uncertainty offshore.
Statistics said card spending in all retail industries, including fuel and vehicles, fell 0.6 per cent.
- © Fairfax NZ News
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