The data adds to a mixed picture for the New Zealand dollar, with weak household spending offsetting the stronger manufacturing survey released earlier in the day. A second monthly fall in card spending points to soft domestic demand, which tends to argue against tighter policy, while flat food prices remove one source of upward pressure on inflation for the month. Fuel costs, which manufacturers flagged as a key concern, remain the bigger swing factor for household budgets, leaving oil prices important for the consumer outlook.

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Yesterday:

• RBNZ’s Conway says October rate decision completely open, OCR more likely to rise

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New Zealand’s factories are finding their stride, but its shoppers are still keeping their cards in their wallets, and flat food prices are only a modest consolation.

Summary:

• Seasonally adjusted electronic card retail spending fell 0.4% in September, after a 0.9% drop in August
• Actual card spending rose 0.9% from a year earlier, up from 0.2% in August
• Card data covers about 68% of core retail sales
• Food prices were unchanged on the month, after a 0.3% rise in August, and up 2.4% on the year
• Food accounts for nearly 19% of the consumers price index
• The weak consumer data contrasts with a strong manufacturing PMI released the same day

New Zealand electronic card retail spending fell for a second straight month in September, while food prices held steady, according to data from Statistics New Zealand on Friday. The figures point to cautious households even as other parts of the economy show more life.

Seasonally adjusted retail spending on electronic cards slipped 0.4% from August, following a 0.9% decline the previous month. In unadjusted terms, actual spending was 0.9% higher than in September last year, a firmer annual pace than the 0.2% recorded in August. Electronic card transactions cover roughly 68% of core retail sales and are the main monthly gauge of retail activity in New Zealand.

The figures suggest consumers remain under pressure. Back-to-back monthly declines in spending, after seasonal adjustment, point to households trimming discretionary purchases, while the annual rise in actual spending is modest. Because the card data measures the value of transactions rather than volumes, part of that rise reflects higher prices.

Separately, Statistics New Zealand’s food price index was unchanged in September from August, after a 0.3% rise the month before. Food prices were 2.4% higher than a year earlier. Food carries a weight of nearly 19% in the consumers price index, so a flat monthly reading removes one source of upward pressure on headline inflation for the month.

The softer consumer data contrasts with a stronger picture from manufacturers. The BNZ-BusinessNZ manufacturing index released earlier on Friday showed the sector expanding at a much stronger rate in September. However, many firms cited fuel prices, cost of living pressures and uncertainty ahead of the election as concerns.

Taken together, the releases describe an economy where production and orders are picking up but household spending is lagging, held back by living costs. A pause in food price growth offers some relief. On its own, however, it is unlikely to change the broader picture for household budgets while fuel costs stay elevated.

The next indications of consumer strength will come from upcoming retail and inflation data. They will show whether September’s weakness in card spending persists into the final quarter, when pre-Christmas demand typically provides a seasonal lift.

This article was written by Eamonn Sheridan at investinglive.com.

Source: Investing Live - News