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Housing-related spending slumps as ANZ reports sluggish retail growth

Author
Liam Dann,
Publish Date
Mon, 10 Jun 2024, 4:42pm
ANZ card spending reflects a sluggish economy. Photo / Sylvie Whinray
ANZ card spending reflects a sluggish economy. Photo / Sylvie Whinray

Housing-related spending slumps as ANZ reports sluggish retail growth

Author
Liam Dann,
Publish Date
Mon, 10 Jun 2024, 4:42pm

Kiwis appear to be putting home renovations on hold as the tough economic conditions bite.

New Zealand’s largest bank reports annual growth in ANZ card transactions was just 2.3 per cent to the end of May, despite inflation running at a higher pace.

Spending in the housing-related category was down nearly 3 per cent year-on-year.

“The only category in the housing group that is up more than negligibly year-on-year is ‘glass, paint and wallpaper’, suggesting cheap spruce-ups may be standing in for expensive renovations,” said ANZ chief economist Sharon Zollner.

Sharply weaker construction activity was evident, with all categories related to building “particularly weak”, she said.

Durables, discretionary spending categories and clothing were all subdued.

“The sharp decline in durables spending is notable. Clothing, housing and discretionary categories are also in the red year-on-year, and this month spending on tourism categories and business goods and services joined them.”

The impetus from tourism-related spending had also turned into a drag on growth, she said.

“The annual growth rate of spending in this category has now ticked into the red. The lift in spending at tourist activities is holding up, but is likely also on borrowed time.”

Spending on vehicle rentals continued to drop away, suggesting a softer autumn shoulder season for car rentals than last year, she said.

Miscellaneous services was one category gaining momentum, with the strength driven by financial services.

But strength in financial services was not necessarily a strong indicator, Zollner noted

“Good advice is invaluable in tough times.”

Also in that category, insurance inflation was running at 14 per cent and rising, meaning the increase in spending was likely entirely due to prices rather than volumes.

Fuel spending had also lifted along with fuel prices, but looked set to fall given recent drops in oil prices, Zollner said.

Liam Dann is business editor-at-large for the New Zealand Herald. He is a senior writer and columnist, and also presents and produces videos and podcasts. He joined the Herald in 2003.

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