The Reserve Bank of New Zealand in central Wellington. — Reuters
WELLINGTON: New Zealand consumer spending remained weak in the third quarter (3Q), adding to signs the economy may have been in recession.
Retail purchases on credit and debit cards fell 0.7% from 2Q, when they declined 2.8%, Statistics New Zealand said yesterday in Wellington.
New Zealand’s economy shrank in 2Q and subdued spending added to risks that the contraction extended into the third even as modest income tax cuts took effect at the end of July.
The Reserve Bank of New Zealand responded to a sharp decline in domestic demand by starting to ease monetary policy in August, and followed up with a larger, 50-basis-point cut last week.
“Retail spending volumes are likely to have contracted further in the third quarter as the consumer-led downturn continues,” said Mark Smith, senior economist at ASB Bank in Auckland.
“Given the weak economic backdrop, we don’t envisage a strong recovery in card spending or robust Christmas trading for retailers.”
While spending on groceries and other consumables in New Zealand was little changed, purchases of durable goods, including clothing and fuel declined, the data showed.
The hospitality sector spending also slowed. — Bloomberg
