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Retail spend on plastic slips in May

NZN 9/06/2016 Paul McBeth

WELLINGTON June 10 BusinessDesk - New Zealanders cut their retail spending on credit and debit cards for the first time in 13 months in May, as people reduced expenditure on hospitality, petrol and vehicles.

Retail spending fell 0.3 per cent, seasonally adjusted, in May, the first decline since April 2015, Statistics New Zealand said.

Vehicle spending was down 1.6 per cent and fuel 1.5 per cent, while spending in the hospitality industry declined 0.7 per cent, the only core sector to register a drop. Actual sales were 3.3 per cent higher than a year earlier at $4.76 billion.

"That was below even our sub-consensus forecast. However, we'd caution against becoming unduly pessimistic about the outlook for household spending based on today's data," Westpac Banking Corp senior economist Satish Ranchhod said in a note.

"Much of this month's decline is a natural response following some very large increases seen in April (which potentially reflected the early timing of Easter this year)."

Hospitality has been driving gains in core retail spending in recent months, cashing in on the country's tourism boom, and the May decline was the first contraction in spending since October.

In actual terms, fuel spending was down 6.6 per cent, reflecting cheap oil prices around the world feeding through the petrol pump.

"Despite recent rises, the price of fuel is still around 10 cents lower than what it was in May last year," Statistics NZ business indicators senior manager Neil Kelly said in a statement.

Core retail spending, which strips out vehicle-related purchases, was down 0.1 per cent in May, and was up 4.6 per cent from a year earlier. Total spending, which includes non-retail and service spending, fell 0.6 per cent in May, and was 4 per cent up from a year earlier.

Card-holders made 130 million transactions in May, up 4.6 per cent from the prior year, of which core retail accounted for 97 million transactions, up 4.8 per cent from May 2015.

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