Hospitality suffers as spending falls sharply in August

New Zealand's spending slowed in August, yet travel, recreation and movie theatres thrived as consumers curtailed spending on hospitality and household items. ANZ bank data revealed that card spending dipped sharply in August, though New Zealanders continued to splurge on travel and entertainment while staying prudent elsewhere.

Seasonally adjusted figures showed card spending stayed flat in August, with annual growth decelerating to 4.1 percent from 6.1 percent in July. ANZ attributed August's typically gloomy weather to the slowdown, suggesting it may have influenced spending habits. While most major spending categories saw slight declines, tourism and recreation spending climbed 2.3 percent in August and were 8.8 percent higher than a year earlier.

Airline and airport spending rose 9.4 percent from a year ago, signaling a continued recovery in travel. Movie theaters emerged as another bright spot, with spending increasing by more than 10 percent in August and being 77.4 percent higher than a year earlier. The rise in movie theater spending could be attributed to the "Odyssey effect" or a resurgence in interest in cinemas, though the exact cause remains unclear.

Conversely, hospitality spending contracted 1.0 percent in August after a gain in July, while housing-related durables dropped 1.3 percent, with every store type in that category experiencing a monthly decline. These two categories collectively make up nearly a third of all card spending. Despite higher fuel prices, ANZ noted that fuel spending fell 1.5 percent in August, still 8 percent above the same period last year.

The bank observed that while overall spending trends remained mixed, with elevated fuel prices and a continuing travel recovery, card spending had been broadly flat in recent months, yet annual growth remained positive, and real spending had been steadily increasing over the past two years.