Kiwis keep the plastic in their wallets ahead of Rugby World Cup
Sept. 9 (BusinessDesk) – New Zealanders clamped down on credit and debit card spending last month, in the lead-up to the Rugby World Cup tournament, which kicks off today.
Total spending on electronic cards fell 0.5% to a seasonally adjusted $5.3 billion in August, according to Statistics New Zealand. That’s the biggest decline since December last year, and just the second in eight months.
Spending in core retail industries, which strips out vehicle related spending, fell 1% to $3.33 billion.
“This follows some strong results in recent months, and it is important not to read too much into the volatility in the monthly data,” said Christina Leung, economist at ASB Institutional. “With household debt levels still at high levels, we expect the recovery in retail spending will be very gradual over the coming year.”
Consumer spending has been slowly recovering after households put off buying decisions last year and focused on repaying debt in a low interest rate environment.
Consumer confidence hit a seven-month high in August, suggesting an improving jobs market was stoking kiwis’ appetite to spend, although building work data released yesterday showed unexpected weakness.
Today’s data shows New Zealanders spent more on fuel and vehicle retailing, which grew 1.6% to $567 million and 0.1% to $106 million respectively, while spending on services was flat at $103 million.
Spending on durables sank 2.4% to $970 million, followed by a 2.1% decline in apparel to $271 million.
Hospital spending dropped 0.5% to $611 million, while spending on consumables fell 0.2% to $1.46 billion.
The decline comes in the month preceding the Rugby World Cup, which the Reserve Bank expects will inject $700 million into the economy with 95,000 extra tourists.
Economists say the bump to the economy won’t just be new money, with people putting off spending until the tournament begins. The first match, between the All Blacks and Tonga, kicks off tonight.