Spending spree losing its puff

By JIM EAGLES

New Zealanders started the new year by continuing to defy declining export returns and by spending - especially on cars - as though the bills will never have to be paid.

But a bunch of economic indicators issued yesterday provided grounds for thinking the spending spree is about to slow.

The ANZ Job Ads Series suggests that the impact of lower export incomes - which has been hitting the Waikato economy in particular for some months - is spreading.

The updated January trade figures from Statistics New Zealand confirm that exports are still on the declining trend of the past eight months. The shortfall between what we exported and what we imported in January is now calculated to be $397 million, compared with a $281 million deficit in December.

For the 12 months to the end of January the deficit was $1.4 billion, compared with a surplus the previous year of $610 million.

Exports are still doing very well by the standards of most of the past 15 years but there has still been a $1.8 billion - or 5.5 per cent - fall in export receipts.

On the face of it the retail sales figures for January seem to fly in the face of that decline in national income.

Statistics New Zealand's headline figure had retail sales in January 1.1 per cent higher than December on a seasonally adjusted basis, more than double what was expected.

That took annual spending to 7.9 per cent above the previous year, also markedly higher than the 6.5 per cent rise the markets had been expecting.

But almost all of the January increase was caused by a big jump in car sales, possibly linked to strong migration, and auto services, mainly due to higher petrol prices.

The increase in core retail spending - excluding autos - was a mere 0.2 per cent, which, on top of the nil retail growth recorded in December, suggests a definite slowdown.

"If you take the cars out, it's a fairly soft underlying picture," said Deutsche Bank chief economist Ulf Schoefisch. "It suggests the underlying picture of spending is weakening."

Auckland's biggest real estate firm, Barfoot and Thompson, said yesterday that after months of increases the average Auckland house price fell $18,000 in February.

And the ANZ Job Ads Series for February, released this morning, points to a slowdown in job creation, but mainly outside Auckland.

The number of job ads nationwide fell 2 per cent during the month to be pretty well back to where it was a year before.

But ANZ chief economist David Drage said that level was largely due to strong job growth in Auckland.

"Job ad levels everywhere except Auckland are below those prevailing 12 months ago."