Healthy picture of spending growth over past year

Total card spending remained flat in February, rising only 0.1% across all industries, but that still left a "fairly healthy picture" of spending growth over the past year, economists said.

Westpac senior economist Satish Ranchhod said retail spending fell 0.3% in February, undershooting the expectations of analysts who were expecting a modest gain.

"But while spending was on the soft side of expectations, this followed a larger 1.4% gain last month and still leaves us with a fairly healthy picture of spending growth over the past year."

Statistics New Zealand figures showed February’s fall was led by a 0.5% fall in spending on consumables, which included grocery and liquor retailing.

Statistics NZ retail manager Sue Chapman said it was the first decrease in the consumables group since May last year and could be the effect of people hunkering down during the two ex-tropical cyclones hitting during the month.

Spending was subdued across most of the six retail industries.

There was little or no change in durables (includes hardware, furniture and appliances), hospitality (accommodation, bars, cafes, restaurants and takeaways), apparel and fuel.

Core retail retail sales, which excludes the fuel and vehicle-related industries, rose 0.3%, she said.

Actual retail spending using electronic cards was $4.9 billion in February, up $157 million, or 3.3%, from February last year.

Mr Ranchhod said durables, which accounted for about one-quarter of retail spending, maintained the lift seen last month.

"We suspect this is related to the second wind in the housing market in recent months.

"With mortgage rates continuing to edge down in recent weeks, and renewed strength in the housing market, we expect to see household spending remaining firm over the next few months."

Spending strength was expected to ease back later in the year, he said.

In part, the new Government’s policies were expected to cool housing demand and, in turn, would dampen growth in consumer spending.

Mortgage rates were also expected to rise modestly by the end of the year.

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