“The post-lockdown sugar-rush has finally come to an end,” says KiwiBank economist Mary Jo Vergara.
“The splurge in spending over the second half of last year lasted much longer than expected. But now we have seen a pullback.”
Kiwibank’s Household Spending Tracker report for the March 2021 quarter showed domestic spend declined 9 per cent in the March quarter, the first decline since the first lockdown ended.
“The buffer of household savings built up over the initial lockdown may be eroding, Vergara said.
The details showed most high-level spend categories were on a downtrend.
Demand for home furniture, electronics and hardware appears to have peaked in the December quarter.
Household-related spend fell 21 per cent in the March quarter.
“There’s a limit to how many pools and pizza ovens can fit in the backyard, and after a year of repairs, there’s nothing left to fix,” Vergara said.
Prospects of a travel bubble may have spurred some people to resume planning and saving for trips overseas.
Spending unavoidably took a hit when Auckland was twice put under level 3 lockdown, she said.
Restaurant spend plateaued, as “dining in” was prohibited.
Spending on fuel dropped as Aucklanders worked from home, and travel to the regions was limited to essential only.
But the spend had since rebounded in Auckland as the city bounced out of the Level 3 lockdowns.
“The America’s Cup was a godsend for Auckland’s hospitality scene,” she said.
“Each race day, the viaduct was packed. And the final day of sailing saw a higher than usual restaurant spend for a Wednesday.”
Despite that many businesses in the CBD continued to struggle.
Kiwibank Household Spending Tracker tracks spending data through KiwiBank’s own electronic transaction data.
On an annual basis, spending was still up 41.8 per cent, although could beinflated because of a shift away from cash, Vergara said.
Meanwhile, preliminary ANZ Business Outlook data for April showed business confidence fell 4 points to -8 per cent, although their own activity outlook was unchanged at 16.4 per cent.
Details on the activity side were flat to weaker. Employment and investment intentions were unchanged, and export intentions rose slightly, but capacity utilisation fell 3 points.
Expected credit availability also fell 6 points. The proportion of firms reporting higher employment than a year ago fell 2 points.
Cost and inflation pressures remained intense, said ANZ chief economist Sharon Zollner.
“Pricing expectations hit a new high, in data that goes back to 1992. Cost expectations data only goes back two years but also hit an eye-watering high of a net 75 per cent of respondents expecting higher costs.”
Despite intentions to pass costs on where possible, profit expectations fell 3 points, with a net 4 per cent of firms expecting lower profitability ahead.
“The stresses and strains in the New Zealand economy are starting to show,” Zollner said.
Source: Read Full Article