Consumer spending up in August, bucks business confidence woes

Paymark recorded 110 million electronic transactions in the month of August. Photo / 123RF

Sliding business confidence could be over as new figures show consumers picked up the pace of spending in the month of August.

Kiwis spent $5.08 billion last month, totalling 110 million transactions through Paymark's network, up 2.6 per cent from July, and 6.3 per cent on August last year.

Spending through Paymark increased 1.4 per cent in August, with the value of transactions 6.5 per cent higher than in the same month last year.

The Auckland/Northland region spent a total of $2.1b last month, Canterbury spent $544 million and Wellington spent $483m.

Marlborough recorded the biggest spending increase last month, with transactions up 12.9 per cent from the same time in 2017, followed by Wanganui with an annual increase of 10.2 per cent.

In August, spending at hardware stores increased by 15 per cent, garden centres 8.2 per cent and furniture stores 1.2 per cent.

BNZ senior economist Doug Steel said the change in Government and new policies had unsettled business but consumers were positive about changes such as increase to minimum wage which is why spending had increased.

"Consumers are feeling relatively good - and certainly good compared to business," Steel said. "If you look at the likes of consumer confidence surveys, they are holding up very positively, and even things like population growth and job ads have been relatively positive over the last couple of months."

Steel said increase to the minimum wage in April had begun to flown through and consumer spending figures from here on would likely rise.

"These August numbers are finally showing that some of this stimulus is coming through, consumers have now got the money and have spent it, and that may well perk up businesses a little bit," he said.

"If you look at the detail in the business surveys, retailers are the most pessimistic.

"I think the increase in spending may go someway to alleviating some of the extremes in activity in the sector.

Economic growth in the second half of the year would likely be stronger than the first half, Steel said.

"These August figures are the first signs of consumers [now] have money and are spending it, and if that's the case then we should see some improvement in business sentiment on the back of it."