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Satish Ranchhod, senior economist at Westpac, notes that New Zealand’s retail spending continued to rise in September, with a 0.4% gain over the month, following a large increase in August.

Key Quotes

“After some very sluggish spending growth in the first half of the year, we may now be seeing the early signs of a resurgence in New Zealanders’ spending appetites. Following a strong 1.3% rise in August, retail spending levels rose by 0.4% in September. That was the second month in a row that spending levels have been stronger than we or analysts more generally had expected.”

“We don’t want to overplay the strength of today’s result, but it’s an encouraging sign given the soft tone of other indicators recently. Importantly, the recent increases in retail spending come hot on the tails of 1) the RBNZ’s larger than expected 50 basis point OCR cut in August, and 2) the pick-up in house price growth in recent months. This will be a welcome development for the RBNZ who have been looking for signs that reductions in the cash rate over the past year are supporting demand.”

“Even with today’s result, we still expect that the RBNZ will cut the cash rate again in November.”