Car sales boom but shoppers slow spending
Shoppers are taking their foot off the pedal, with retail sales flat in March.
People spent less on fuel and clothes, despite sky-high consumer confidence, a better job market, and in contrast to a booming new car market.
Total electronic card spending was unchanged in March, after a 0.8 per cent lift in February, according to Statistics NZ. Clothes sales are likely to have slipped because of late Indian summer weather, delaying the start of people buying winter clothes, economists said. But a cooler housing market may also have seen shoppers change down a gear at the shops.
Bank economists had expected a monthly spending gain of 0.4 per cent, so the flat result was weaker than expected. The Statistics NZ figures were in line with recent Paymark card spending figures which showed a widespread slowdown in sales around the country, apart from Canterbury.
Westpac Bank economists said the trend in card spending "clearly slowed" in the three months to the end of March, after strong spending towards the end of last year.
"It's possible that the slowing housing market is starting to feed into a slower pace of spending, even though consumer and retailer confidence remain high," Westpac said.
Last month's rise in the official cash rate, the first of many to come, may have dented the overall willingness to spend and will likely bite harder on shop sales later this year. Mortgage rates are expected to rise a total of 100 basis points this year, with the next move up expected on April 24.
Latest Quotable Value data shows average house prices up just 0.1 per cent in the past 3 months, though 8.8 per cent over the last year. Rising house prices increase the "wealth effect" and typically encourage greater spending.
Durables, which include furniture, hardware and appliances, dipped 0.1 per cent in March.
Fuel sales fell for the second month in a row, dropping 1.7 per cent in March, a fall of $13 million. Petrol prices actually rose 2c a litre to almost $2.18 a litre at the end of February, but were cut 2c in the middle of March.
Clothing sales were down 2.4 per cent, a drop of $7 million. ASB said the excellent late-summer weather had delayed many winter clothing purchases, repeating the pattern seen last year.
Sales of consumables such as food and drink, were up 0.4 per cent or $6 million in March, with tepid growth of 3 per cent in the past year.
ANZ Bank economists said that annual growth in retail sales, at 5.8 per cent, was broadly in line with rising household incomes, suggesting people were "not getting too carried away with the current feel-good vibe".
In sharp contrast to flat credit and debit card figures, new car and commercial vehicle sales are in top gear, with the strongest March sales for 30 years. There were more than 11,000 new vehicle registrations last month, up 18 per cent on the same month last year, according to figures out last week.
ANZ Bank economists said despite slowing momentum in the retail sector, interest rate rises were justified by the robust economy.