‘Splurge’ in household spending finally over
‘‘THE postlockdown sugar rush’’ has finally come to an end, Kiwibank economist Mary Jo Vergara says.
‘‘The splurge in spending over the second half of last year lasted much longer than expected. But now we have seen a pullback.’’
Kiwibank’s Household Spending Tracker report for the March 2021 quarter showed domestic spending declined 9% in the quarter, the first decline since the first lockdown ended.
‘‘The buffer of household savings built up over the initial lockdown may be eroding.’’
The details showed most highlevel spending categories were on a downtrend. Demand for home furniture, electronics and hardware appeared to have peaked in the December quarter.
Householdrelated spending fell 21% nationally in the March quarter.
‘‘There’s a limit to how many pools and pizza ovens can fit in the backyard, and after a year of repairs, there’s nothing left to fix,’’ Ms Vergara said.
The upcoming travel bubble with Australia might have spurred some people to resume planning and saving for trips overseas. Spending unavoidably took a hit when Auckland was twice put under Level 3 restrictions.
Restaurant spending plateaued, as ‘‘dining in’’ was prohibited, Ms Vergara said.
Spending on fuel dropped as Aucklanders worked from home, and travel to the regions was limited to essential only.
But spending had since rebounded in Auckland as the city bounced out of the Level 3 restrictions, Ms Vergara said.
‘‘The America’s Cup was a godsend for Auckland’s hospitality scene,’’ she said.
‘‘Each race day, the viaduct was packed.
‘‘And the final day of sailing saw a higher than usual restaurant spend for a Wednesday.’’
Despite that, many businesses in the CBD continued to struggle.
The Kiwibank Household Spending Tracker tracks spending data through Kiwibank’s own electronic transaction data.
On an annual basis, spending was still up 41.8%, although that could be inflated because of a shift away from cash, she said.
Meanwhile, preliminary ANZ Business Outlook data for April showed business confidence fell 4 points to 8%, although their own activity outlook was unchanged at 16.4%.
Details on the activity side were flat to weaker. Employment and investment intentions were unchanged, and export intentions rose slightly, but capacity utilisation fell 3 points.
Expected credit availability also fell 6 points. The proportion of firms reporting higher employment than a year ago fell 2 points.
Cost and inflation pressures remained intense, ANZ chief economist Sharon Zollner said.
‘‘Pricing expectations hit a new high, in data that goes back to 1992. Costexpectations data only goes back two years but also hit an eyewatering high of a net 75% of respondents expecting higher costs.’’
Despite intentions to pass costs on where possible, profit expectations fell 3 points, a net 4% of firms expecting lower profitability ahead.
‘‘The stresses and strains in the New Zealand economy are starting to show.’’ — The New Zealand Herald