Retail sales rebounded in May as higher interest rates
loom. Photo by Gregor Richardson.
Otago's retail spending bounced in May, along with much
the rest of the country, led by sales in the food, fuel and the
Otago was just in the top third of 17 regions across the
country, booking a 7.4% increase in spending, up from $201.2
million in May last year to $216.1 million, according to
Paymark's monthly electronic transaction report yesterday.
While Bay of Plenty had the largest percentage gain, up 10.2%
to $270.9 million, the combined Auckland-Northland gain of
7.8% stood at $1.77 billion - more than triple its closest
rival in Canterbury, at $500.6 million.
Paymark, the country's largest card processor, showed
spending for May was up 8.3% from $4.03 billion a year ago to
$4.37 billion, while separate data from Statistics New
Zealand (SNZ) yesterday had the overall electronic spend for
May up 1.3% at $6.2 billion, based on 121 million
The Reserve Bank is this morning expected to lift the
official cash rate 0.25% to 3.25%, making it three rises in a
row for interest rates.
New Zealand Institute of Economic Research principal
economist Kirdan Lees said the domestic economy was
strengthening and was taking more regions and industries
along with it.
''More businesses are investing and hiring additional staff.
Inflation pressures are building, but only slowly.
''Right now, interest rates need to move higher. But risks
from the flying kiwi dollar, Auckland's housing market and a
slowing Chinese economy mean future rate increases are less
assured,'' Dr Lees said.
Economists for ASB and Westpac said May spending was
''stronger than expected'' and had ''bounced back strongly''.
ASB economist Christina Leung said the result reflected
continued optimism among households, which she expected would
continue to strengthen and support the economy growth during
''Population growth is likely to be a key driver of spending
in this category [consumables] given the increased demand for
necessities such as groceries,'' Ms Leung said.
Westpac economist Felix Delbruck said the SNZ figures bounced
back even more strongly than the Paymark data suggested.
''The rebound supports our hunch that some of the weakness in
card spending in April was due to the unusual confluence of
Easter and Anzac Day holidays in the same week, which seems
to have depressed a range of New Zealand activity indicators
for April,'' he said.
SNZ's business indicators manager Neil Kelly said fuel and
consumables had the largest rises in the retail industries.
Fuel spending was up 2.8%, or by $21 million, while
consumables were up 1.1%,or $18 million.
Paymark said the strongest growth was in the hospitality
sector, at 14%, food and liquor stores up 12.3%, furniture
stores up 11.3% and hardware stores up 10.7%.
From the Paymark data, the volume of transactions nationally
was up by 8.7% to 89.4 million. Otago up 5.1%, but that gain
was in the bottom four placings and well behind the more than
9% growth of Canterbury,Wairarapa, Hawkes Bay, Waikato and
the Bay of Plenty's 10.4% gain.
At a glance
• Spending through Paymark
up 8.3% annually.
• Retail spending, as measured by Statistics NZ,
increased 1.3% in May.
• Spending increased in all six retail industries,
the first time this has occurred since October 2013.
• Reserve Bank expected to increase official cash