Turbulent times keep us—and our wallets—safely indoors
The noticeable feature of retail spending at present is what is not happening: steady sales growth is missing. There is growth in total but it is proving patchy, and even non-existent among many retailers. To use an aeroplane analogy, we’re experiencing turbulence at present but—we hope—we’re still gaining altitude.
August was one of those choppy months. The total value of spending through the Paymark electronic network was up on last year, but only just—and not for 44 percent of sectors within a 104-sector breakdown of the total. The noticeable missing element was building-related spending such as at hardware outlets. It would appear that the general sluggishness of the housing market is outweighing any incentive to beat the GST increase.
Elsewhere there is pre- October big-ticket spending occurring—more use of cards to pay for vehicles, consistent with the sharp increase in the number of new vehicle registrations, and more spending on whiteware and appliances—but we are being selective. In total, spending through Paymark at big-ticket outlets in August was less than a year earlier. A lack of credit and/or a propensity to save appear to be prompting discretion.
Interestingly, discretion is exercised in many ways. We have been spending less at florists and sporting goods stores for some months and now we’re also spending less at pet shops and pubs/bars.
More generally, spending is still increasing in the hospitality sector but here too the rate of growth is slowing. Cafes and takeaways remain ‘in’ but a general decline in accommodation spending suggests home is where the heart is at present, along with the wallet.
Anthony Byett is an economist who consults to Paymark, New Zealand’s largest Eftpos provider