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November earthquake cuts into New Zealand card spending
December 8, 2016 / 11:40 PM / a year ago

November earthquake cuts into New Zealand card spending

WELLINGTON, Dec 9 (Reuters) - Retail card spending in New Zealand slowed in November after two straight months of strong growth as economists pointed to disruptions caused by a deadly earthquake that damaged buildings and communication lines.

Statistics New Zealand (StatsNZ) said retail spending using electronic cards slipped 0.1 percent in November after a revised 0.5 percent gain the previous month, with falls in the hospitality, clothing, footwear and durable goods sectors.

It is only the third fall this year, with card spending up a solid 5.1 percent over the past year.

The impact of the 7.8 magnitude earthquake was felt the most in the small South Island town of Kaikoura where tour operators and retailers are struggling to stay afloat as the area remains largely cut off from the rest of the country.

The New Zealand government on Thursday downgraded its budget surplus estimate for 2016/17, largely due to an estimated NZ$1 billion ($717 million) in net costs related to the earthquake.

But economists were relaxed about the longer term.

“Despite recent disruptions, we remain optimistic about the outlook for spending heading into the holiday period,” said Satish Ranchhod, senior economist at Westpac.

“Spending continues to be supported by low interest rates, rapid population growth and strong tourist arrivals. The recent firming in dairy prices also bodes well for spending appetites in rural regions.”

New Zealand has seen an unprecedented wave of net migration, partly due to kiwis returning from Australia as its economy cools.

Global dairy prices have been on a tear since July, jumping 56 percent, bolstering payouts to farmers, improving New Zealand’s terms of trade, and propping up economic growth.

$1 = 1.3941 New Zealand dollars Reporting by Swati Pandey

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