New Zealanders kept their hands in their pockets in June, with retail card spending falling for the first time in three months and handing shops little of the winter lift they had been counting on.
Figures released by Stats NZ on Wednesday showed spending in the retail industries dropped 1.4 percent, or $98 million, in June compared with May once seasonal patterns are stripped out. Core retail spending, which leaves out fuel and vehicles, slipped 1.5 percent or $92 million. It was a soft finish to the June quarter and a reminder that the recovery many economists have been picking is still patchy and far from guaranteed.
The weakness was spread across most of the things households spend money on. Durable goods such as furniture, appliances and hardware took the biggest hit, down $67 million or 3.9 percent. Hospitality, which covers cafes, restaurants, bars and takeaways, fell $28 million or 1.9 percent. Apparel dropped 2.2 percent and spending at the petrol pump eased 1.7 percent, largely because petrol prices themselves have come down. Only consumables, the grocery-heavy category that captures the weekly shop, managed to grow, and even then just $11 million or 0.4 percent.
Across all industries, not only retail, cardholders spent $9.1 billion in June through 166 million separate transactions, at an average of $55 each. That average is up a dollar on the same month a year ago, which tells its own quiet story about how much of the past year’s spending growth has been prices rising rather than people buying more. Annual growth in card transactions eased to 1.3 percent in June, down sharply from 3.3 percent in May.
Westpac senior economist Satish Ranchhod said the fall was disappointing given cheaper petrol should have freed up money for households to spend elsewhere. In the bank’s response to the data he said that “while lower fuel prices have put money back into households’ pockets, spending was also down in most other areas”, adding that “things are still looking tough” for consumers. Westpac expects spending to rise only gradually through the back part of the year, pointing to a soft labour market, lingering cost pressures and cautious households as the reasons the pick-up will be slow.
Retail NZ chief executive Carolyn Young said the numbers would sting for shopkeepers who had been hoping momentum would build through winter. “Retailers will have been hoping to see another rise in spending for June, with the global uncertainty looking like it was easing somewhat,” she told 1News. May had delivered spending up 2.8 percent on the same month a year earlier, so the June reversal felt like a step backwards. Young said many retailers were caught in a bind, weighing whether to lift prices to cover their own rising costs or hold the line to keep nervous customers coming through the door. “It’s a tough balance to strike when times are tough like this,” she said.
The soft retail read sits awkwardly alongside brighter signals elsewhere in the economy. The manufacturing sector recorded its strongest month in five years in June, with the BNZ-BusinessNZ Performance of Manufacturing Index jumping to 59.7, and heavy traffic on the roads, a rough proxy for freight and activity, has been picking up. But the household side of the ledger has been slower to turn. Consumer confidence remains subdued, unemployment is still elevated, and plenty of families are only now rolling off the low fixed mortgage rates they locked in a couple of years ago.
Borrowing costs are also heading the wrong way for anyone hoping for relief at the till. The Reserve Bank lifted the official cash rate by 25 basis points to 2.5 percent on 8 July, its move to keep a lid on inflation that is expected to have peaked at 3.9 percent in the June quarter, still above the 1 to 3 percent target band. Cheaper petrol, helped by the partial reopening of the Strait of Hormuz, has taken some heat out of near-term price pressures, but the June card figures suggest that any spare cash is going towards paying down debt and covering the essentials rather than discretionary treats. Spending on the fun stuff, from a night out to a new couch, is exactly where the pull-back showed up.
There is a seasonal wrinkle worth keeping in mind. June is the depth of winter, foot traffic naturally softens, and a single cold, wet month can knock a percentage point off spending without signalling anything deeper. The quarterly picture was steadier, with retail spending across the three months to June up a modest 0.4 percent. Even so, the direction of travel in the monthly numbers matters to retailers who have already been through a long, thin patch and were banking on the second half of the year finally turning in their favour.
For now the message from the data is one of caution rather than crisis. Households are still spending, just carefully, and are steering money towards groceries and away from the extras. Whether that changes over spring will depend on how quickly the labour market steadies, how far inflation falls, and whether the confidence that has been slowly returning to boardrooms starts to reach the average shopper’s wallet.
What are you seeing in your own spending this winter, and are you holding back or feeling more confident about the year ahead? Share your thoughts in the comments below.
This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂
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