NZ consumers pull back on spending in May

Credit and debit car spending fell in May after holidays in April fuelled a rise. Photo / 123RF

Consumers pulled back on credit and debit car spending in May after holidays in April fuelled a rise.

Seasonally-adjusted electronic card spending fell 0.5 per cent in May after rising 0.6 per cent in April. Core retail spending, excluding fuel and vehicle spending, also fell 0.5 per cent following a 0.4 per cent lift in April when people took advantage of the extended holiday period, which included Easter and school holidays, to travel domestically and eat out more.

ASB Bank senior economist Mark Smith said the data was "considerably weaker than market expectations." Economists polled by Bloomberg had expected a 0.5 per cent rise.

"Card spending has slowed over the last three months," said Stats NZ retail statistics manager Sue Chapman. "Since February 2019 we have seen relatively softer growth in the retail industries indicating an easing in domestic spending."

Softer growth in household spending was one of the factors the Reserve Bank's monetary policy committee mentioned when it cut the official cash rate by 25 basis points to a record low 1.5 per cent at the May review.

"The members agreed that given the recent weaker domestic spending, and projected ongoing growth and employment headwinds, there was a need for further monetary stimulus to meet its objectives," according to a summary record of the meeting included in the monetary policy statement.

ASB's Smith said, however, he still expects a "moderate rate of consumer spending growth going forward." He said government support for low-income families, low interest rates, record-high levels of residential construction activity, strong tourism inflows and low unemployment are supportive of retail spending.

However, "soft wage growth, cooling employment growth, high fuel prices and a weak Auckland housing market backdrop will likely limit the overall pace of NZ retail spending growth going forward."

Spending on consumables fell 0.4 per cent, or $9 million, in May to $2.04 billion while spending on hospitality was unchanged at $1.08b.

May spending on durables - which include electronics, whiteware, hardware, and furniture - fell 0.8 per cent or $10m to $1.3b. Spending on apparel was down $4.7m, or 1.5 per cent, to $302m while fuel spending dipped 0.4 per cent, or $2.6m, to $604m.

In actual terms, cardholders made 151 million transactions across all industries in May, up from 144 million in April. The average value was $49, unchanged from the prior month.

Total actual retail spending using electronic cards was $5.39b, versus $5.33b in April, and was 3.2 per cent higher than in May 2018. Core retail spending was $4.6b versus $4.58b a month earlier. On the year it was up 4.6 per cent.