New Zealanders are continuing to spend more on housing-related items but tight budgets and discerning shoppers are otherwise making for a tough retail environment, according to latest spending figures.
The Paymark Consumer Index, which covered all electronic transactions through the Paymark network, showed seasonally adjusted card spending increased by just 2 per cent in August from July.
Consistent with the reported housing market recovery, spending on things like home decorating, hardware, plumbing, and furniture continued its steady ascent. A total spend of $307 million last month was up 0.8 per cent on the previous month and 7.5 per cent up on August 2011.
But spending growth across all other areas was relatively weak, said Paymark spokesperson Anthony Byett.
Non-discretionary spending, including supermarkets, meat and fish vendors, petrol stations and power companies, was $1.49 billion in August. That was up 3.2 per cent from July and 5.4 per cent on August 2011.
Hospitality spending rose 1.4 per cent from July to $378 million. This represented 1.3 per cent annual growth.
Byett said the biggest pinch was in discretionary spending, which included the likes of travel companies, pharmacies, gyms, and doctors. A total of $516 million was 0.4 per cent growth month-on-month and 2.1 per cent growth year-on-year.
Although those figures showed growth, the data was not as good as it first looked, Byett said.
Bad snowstorms in August 2011 interrupted shopping in the South Island last year and spending was generally slow nationwide in July this year, he said.
"Last August was pretty awful so being better than that is not really saying a lot. And July wasn't a great month either," he said.
Furthermore, the total spend was further inflated by higher petrol prices in recent weeks.
Byett said he was not surprised or overly concerned about the slow growth in electronic spending, given the global economic situation and underwhelming income growth in New Zealand.
"I also think it's part of the adjustment away from the consumption frenzy we saw in the 90s," he said.
New Zealander were not going out and "spending like crazy" anymore.
Byett said the fact that New Zealanders were buying fewer trips through travel agents at present - one of the discretionary items - would in part be due to more purchasing directly online.
Statistics New Zealand would release the country's second-quarter gross domestic product statistics this Thursday, with economists predicting a slowdown in growth.
A Reuters survey of 13 economists predicted GDP grew only 0.3 per cent in the second quarter. That compared to 1.1 per cent growth in the first quarter.
The Reserve Bank of New Zealand's last week issued its monetary policy statement, in which it forecast 0.6 per cent pace.
Meanwhile, according to the latest NZIER Consensus Forecasts, the economic recovery would be a little more protracted than previously thought.
It said today that economic growth would average 2.6 per cent over the next three years, with the Canterbury rebuild acting as a key driver of activity.
Households and exports would contribute modestly.
The Forecasts said growth in new jobs would be "solid but unspectacular", wages would grow at a moderate pace, and exports would be weaker as global demand softened.
Forecasters now expected the exchange rate to be higher for longer.
The NZIER Consensus Forecasts are an average of New Zealand economic forecasts compiled from a survey of financial and economic agencies.