A solid jump in retail spending and higher-than-forecast sales tax revenue point to consumers being in good heart.
Seasonally adjusted retail card spending jumped 16.3 per cent in June compared to May when it spiked 78.9 per cent from the lockdown month of April, Stats NZ figures show. Core retail spending – which strips out expenditure on fuel and vehicles – was up 15.3 per cent from May when it was climbed 72.6 per cent.
Actual retail spending hit $5.7 billion in June, up 8 per cent from a year earlier, and the highest level since January.
The lift was led by spending on durable goods – furniture, hardware, appliances, and recreational goods – which rose $310 million or 24 per cent from a year earlier. And at $1.6b, it was the highest it has been since December last year.
“Businesses that sold furniture, supplies for DIY home projects, and snow gear, among other goods, experienced a decent boost this June,” Stats NZ retail statistics manager Kathy Hicks said in a statement.
Supermarkets, specialised foods, and liquor stores – consumables – had the second-largest increase, up $205m, or 11 per cent, at $2.15b from June 2019.
Only two of six industries experienced a drop.
Fuel spending was down 15 per cent from the year-earlier month at $466m while hospitality spending dropped 7.3 per cent to $934m.
“The drop in fuel spending would have been affected by cheaper pump prices and flexible working arrangements – many businesses only started returning to the office after the move to alert level 1 on June 8,” Hicks said.
“While the hospitality industry is being propped up by domestic travel and tourism, it is still constrained without international tourism to boost the spending.”
Meanwhile, government accounts published today showed that the tax take was $79b in the 11 months to May 31, $1.5b, or 1.9 per cent, above the Budget forecast in May.
“This is mainly due to higher than forecast GST revenue, which was not as adversely affected by lower economic activity as assumed in the GST forecast, Treasury said.
The data is “indicating consumers are out spending again – a positive sign for the economy post lockdown,” said Finance Minister Grant Robertson.
Westpac NZ economist Satish Ranchhod said some of the recent strength in retail spending was probably pent-up demand after the lockdown that won’t be sustained, and that the end of the government’s wage subsidy will likely slow spending down as well.
“Even so, the recent strength in household spending is an encouraging sign. It points to underlying strength in household spending appetites despite some powerful headwinds, including a rise in unemployment,” Ranchhod said.