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ASB Quickview: May 2019 Card Spending: Soft May as high fuel prices bite

Fuseworks Media
Fuseworks Media


Soft card spending in May, weighed by lower apparel, durable, fuel and consumable spending. 

Recent rises in fuel prices may be to blame.

Growth rates have been volatile of late making it difficult to discern trends.

However, we expect a moderate rate of consumer spending growth going forward. We do not expect the consumer to be at the vanguard of the next upturn in in economic activity.


Retail spending was considerably weaker than expected in May, weighed by weaker spending for apparel, durable and consumable spending following solid increases in prior months. The lift in fuel prices in recent months looks to be impacting the wider retail sector. Moreover, we expect moderate rates of consumer spending growth going forward.

The Government’s Families Package, historically-low interest rates, record-high levels of residential construction activity, strong tourism inflows and low unemployment are supportive. But soft wage growth, cooling employment growth, high fuel prices and a weak Auckland housing market backdrop will likely limit the overall pace of NZ retail spending growth going forward.


May retail electronic card spending fell 0.5% mom, considerably weaker than market expectations (+0.5% mom).

Core spending (ex-fuel and vehicle-related) was also soft, falling 0.5% mom. Lower spending for consumables (-0.4% mom), durables (-0.8% mom), apparel (-1.5% mom), and fuel (-0.4% mom) contributed to the declines. Spending in these areas has been advancing solidly in earlier months, so a pullback of sorts was likely due.

Spending on fuel fell 0.4% (+3.8% 3m3m), consistent with broadly unchanged fuel prices over the month. However, the approximate 25 c/l climb since the start of the year looks to have dampened discretionary spending.

The warm May weather also looks to have weighed on apparel spending, which fell 1.5% mom (-0.8% 3m3m). May 2019 was the 3rd warmest on record for NZ, albeit with differences by region. Hospitality spending was flat with slowing quarterly growth from this sector consistent with the slower growth in tourism arrivals.

Durables spending fell 0.8% mom in May (0.3% 3m3m). We retain a positive outlook for durable spending, and expect the recent strength in residential building consents will trigger more durables spending towards the end of the year. There will be regional facets, with the soft Auckland housing market expected to weigh on wider retail activity, whilst most other regions should fare better.

Retail card spending in the three months to May rose 1.2% (core 1.1%). This was a slightly weaker 3-monthly pace than in April. Annual retail spending growth slowed to 3.2% for retail and 4.6% yoy for core in the May 2019 year.

Growth rates of late have been volatile, making it difficult to discern definite trends.

We expect a moderate rate of consumer spending growth. Supporting NZ consumer demand are historically-low retail borrowing rates and the Government’s Families Package. Tourism spending is likely to continue grow, albeit at a more modest pace. Low wage growth and high fuel prices may limit the pace of household spending growth going forward.

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