August consumer spending up 1.1%

AUCKLAND: New Zealanders appear to have heeded Reserve Bank governor Adrian Orr’s advice in August and headed out to spend.

Seasonally adjusted electronic card spending lifted 1.1% in August after falling 0.1% in July. Economists polled by Bloomberg had expected a lift of 0.5%.

Core retail spending, excluding fuel and vehicle purchases, lifted 1.3% after falling 0.4% in July.

The central bank cut rates by 50 basis points to a record low 1% on August 7 and Mr Orr called on consumers to spend more and businesses to invest more.

‘‘Consumers look to have heeded the RBNZ’s advice to go out and spend, but we remain sceptical as to how long this retail resilience will last,’’ ASB senior economist Mark Smith said.

Fuel was the only retail industry to show a decline, falling 1.4% or $8 million to $581 million after lifting 3.2% in August.

Lower fuel prices probably helped spur the spending.

‘‘However, the solid 1.3% rise in core points to a more substantial pickup in spending appetites,’’ Westpac senior economist Satish Ranchhod said.

Mr Ranchhod said it was not obvious whether the rate cut boosted spending in August, but ‘‘we do expect that the related falls in mortgage rates will help to support spending over the coming year’’.

The largest increase in spending was on durables, including hardware, furniture and appliances, which rose $23 million or 1.7%. Consumables, including groceries and liquor, were up $16 million or 0.8%. Hospitality spending also lifted $16 million or 1.5%.

Spending in the apparel industry rose 4.5% or $13 million after falling in July.

In actual terms, retail spending on electronic cards was $5.35 billion in August, up 2.8% or $147 million compared with the same month a year earlier.

Core retail spending was $4.59 billion, up 5% from a year earlier.

Cardholders made 150 million transactions across all industries in August with an average value of $49 per transaction. — BusinessDesk