Retail spending has begun to increase, data shows. Photo: Unsplash/ Simon Kadula
Retail spending was not great in August, but was not as bad as in July, new data suggests - and commentators say some 'green shoots' are starting to emerge.
Data from electronic payments network Worldline showed $2.89 billion was spent in August, down 0.5 percent from the same time last year.
But that was an improvement from the 2.6 percent drop recorded in July.
Chief sales officer Bruce Proffit said it was tempting to attribute the trend to interest rate cuts and improving business confidence.
But he said it was largely due to the usual seasonal increase of this time of year.
"There is no doubt that it has been a tough winter for merchants, and the seasonal lift in spending that tends to occur around now and run into Christmas will be extra welcome this year," he said.
"That the spending gap between last year and this year narrowed slightly will also be a relief. Hopefully the worst is now behind, both for retailers and their customers."
First Retail Group managing director Chris Wilkinson said the official cash rate cut and resulting interest rate changes had a "very, very strong" psychological impact across all sectors.
"We've seen green shoots across many categories at the moment. That's very welcome."
He said there had also been more people expressing interest in renting retail premises.
"In general terms we have seen a shift in psyche across New Zealand.
"We have seen changes in other parts of the world as well and there's always a mirroring effect but I think, while we are not out of the woods, this is very welcome and much needed."
Retail NZ chief executive Carolyn Young told RNZ on Tuesday that there would be some businesses that could not afford to hang on until next year for things to improve.
Centrix data showed an increase in liquidations of more than a third for retail businesses.
BNZ chief economist Mike Jones said it would take a while for interest rate cuts to filter through to those on fixed home loan rates.
"But it may be that people are mentally-adjusting future mortgage payments and allowing themselves to spend a little of the windfall. The recent income tax adjustments may also be playing a role.
"I'd still characterise these factors more as offsetting some of the other headwinds facing household spending than things that are likely to see people flooding back to the shops. Certainly, we're still seeing households forgoing discretionary spending in a big way in order to maintain spending on the essentials.
"And we are going to see the labour market deteriorate further from here and population growth continue to slow down. So, while we may see some gradual improvement in spending levels from here, it's going to be slow going, and more akin to stabilisation at first."
