Statistics New Zealand says total retail spending was flat during the month of September but core retail spending edged up by 0.3%.
On an annual basis, total spending fell by 5.6% compared to September 2023.
Stats NZ said on Monday that core retail spending – which doesn’t include fuel and vehicles – rose 0.3%, or $19 million, in September.
Spending on cards on a seasonally-adjusted basis came to $6.382 billion, according to Stats NZ, the same as a month prior in August.
Cardholders made a total of 157 million transactions across all industries during September, averaging $55 per transaction, resulting in total electronic card expenditure of $8.6 billion.
The number of card transactions in September was down 4.2% compared to August, while total electronic card expenditure was $400 million lower than August’s total.
Stats NZ said seasonally-adjusted specific movements by retail spending category in September 2024 included:
- hospitality, up 1% or $12 million
- consumables, up 0.2% or $4.1 million
- apparel, up 1.1% or $3.6 million
- motor vehicles (excluding fuel), up 0.8% or $1.4 million
- durables, down 0.5% or $7.8 million
- fuel, down 3.1% or $16 million
On a quarterly basis, seasonally adjusted changes in the September quarter compared to the June quarter showed electronic card spending fell by 0.7% or $135 million.
Core retail spending which strips out fuel and vehicles fell by 0.5%, or $91 million, when comparing the September quarter with the June quarter.
Electronic card spending inched up 0.2% during August, breaking a sixth month streak of falling spending. Between the months of February to July, total retail spending figure movements fell in order of 0.8%, 0.7%, 0.4%, 1.1%, 0.6% and 0.1%.
Closed wallets
Westpac senior economist Satish Ranchhod said the downturn in retail spending through the first half of the year had now “been arrested” but spending levels weren’t turning higher just yet.
“We expect that spending growth will remain modest in the near term, especially as the labour market has been softening,” Ranchhod said.
“However, spending is expected to start turning higher as we head into the new year. In addition to tax cuts, interest rates are pushing lower. With most New Zealand mortgages fixed for a period, it will take some time for interest rate reductions to flow through to households’ back pockets. But by the end of the year, many families will start to see some relief. Consistent with that, households have told us they’re starting to feel more optimistic about the outlook for 2025.”
Retail NZ Chief Executive Carolyn Young said the sector had been “delighted” that the Reserve Bank cut the Official Cash Rate (OCR) by 50 basis points last week to 4.75% – but consumers would continue to keep their wallets “firmly in their pocket” until they saw changes to mortgages, loans and rent.
“We are certainly hoping that there will be a lift in consumer confidence before the critical Christmas sales period,” she said.
“While the economic numbers are improving it will take some time for consumers to feel that they have additional money in their wallet. Consumer confidence is key right now and retailers are hearing that consumers are worried about their job security and only purchasing the essentials.”
24 Comments
Higher power prices could soak up some of the savings from lower mortgage rates. Rising electricity demand and underinvestment in new generation has reached a tipping point.
Energy researchers say rising demand for electricity in summer will have repercussions on lake levels come the next winter
Transpower says while risks of an electricity supply shortage this year have eased, next winter's forecast is concerning
Let's hope the few industrial employers still operating in NZ can ride another winter wave of high energy prices.
Agreed. The previous government provided subsidies for households to buy EVs and for industrial users to electrify their industrial heat without fixing supply constraints first.
Like everything, we waited intently for a crisis to strike before kicking off design and construction on projects that will take 2-3 years to build.
I hate these 'wallets firmly in their pockets' comments. As if people are rolling in cash, but are just being tight because of, what, vibes? People are giving all of their money away because non-discretionary costs have increased so much. They have nothing left to spend on discretionary stuff. They are not keeping their money in their wallets, they don't have any money in their wallets!
They have nothing left to spend on discretionary stuff. They are not keeping their money in their wallets, they don't have any money in their wallets!
Yes. But you also need to consider that there is a segment of society that does have disposable income in their wallets but are less willing to spend. So it's important to consider both aggregates of empty wallets and less empty wallets.
Then there is the drunken sailor effect. Likely to be less of that happening at a time when we need them. I think there is a correlation between credit impulse and drunken sailor profiles. I think it was already clear that even before the current economic doom that the paycheck-to-paycheck life was the norm, not the exception for many.
Sure. Consumer spending is down about 12% in real terms from the twin peaks of 2019 and 2021. There are plenty of people that still have money and are spending it. But, some will be spending 20% to 30% less into the consumer economy in real terms as a result of fixed incomes and rates, mortgages, insurance, energy etc.
At a macro level, given current settings, consumer spending, employment, profits, etc all rely on a steady flow of credit money coming into the economy. Until that flow starts again, the recovery will be a pipe dream. Unless of course, we are going to persuade people to un-save!
I think we underestimate the role loose fiscal policy played during the "rockstar" days of the NZ economy. Fiscal spending grew just under 80% from 2015 to 2023 and I believe had a major role to play in boosting consumer and business confidence.
The reverse may also be true if the government continues to clamp down on fiscal spending, meaning we may not have seen the worse of the retail downturn yet.
Agreed. But whats wrong with continuous deficits. Look at Australoa Vs NZ, what do you see? Are Aus households wealthy because of mining blah or because theor Govt invests in the country?!?
Exactly, the narrative that the current state of the economy is temporary infuriates me. As if this “cost of living crisis” is but a period of time that we just need to work through “survive to 25” is another catchy phrase thrown around. I fear this is the new normal. I don’t see where our wage increases are coming from or when the ongoing rising costs everywhere you look will cease. Buckle up folks!
Exactly.
There was a lot else going on pre-Covid that we our MSM does not factor into their "low interest = high economic growth" equation.
Exports for one grew quite strongly since the late 2000s off the back of strong Chinese demand for our dairy, meat and timber. That white gold rush also came to an end about 2 years ago with no end in sight of a Chinese slowdown.
Are these figures inflation adjusted? I see it's seasonally adjusted. On an annual basis, are they even further in reverse once inflation adjusted? They might well still be month on month too.
What if house price/rent declines were released after adjusting for inflation. Some would find that quite disturbing....
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.