Consumer spending this August was down 1.8% from August last year. This marks the third consecutive month with a decline in spending. Last month we highlighted some of the wider economic measures (OCR, inflation, interest rates) beginning to soften, however the economic environment is still tough for many and a byproduct of this is the observed spending trends.

• Consumer spending dropped -1.8% and transaction volumes dropped -0.7% when compared to August 2023.
• Groceries & Liquor showed the strongest growth, up just 1.7%. Department Stores & Leisure was the only other storetype up on August 2023 (0.8%). See table below.
• Just two regions observed growth in spending, with the Wellington Region up 0.7% and the West Coast Region up 0.2%. Like July 2024, domestic tourism dropped across all NZ regions.
• Compared to August 2019 (pre-pandemic), consumer spending was up 17.9%.

Unwarranted Wellington bashing, perhaps?

With public sector cuts, the work from home phenomenon, construction of cycleways and the general downturn of the economy, it’s been a pretty challenging time for many retailers in the city. Despite these challenges, city retailers haven’t performed too badly overall and many locals are doing what they can to keep the lights on at their favourite stores.
Spending in Wellington city this month rose 1.9% against August last year (and 1.4% for the last 12 months). Whereas spending in the major metro cities of Auckland, Hamilton, Tauranga, Christchurch and Dunedin all fell, collectively averaging a drop of -2.9%.
When factoring in the above macro-environmental challenges, and when comparing to the other major metro cities in the country, Wellington City’s result is to be applauded.

The growth in Wellington this month was driven by its locals (spending up 3.0%), its neighbouring areas (2.8%) and international tourism (4.9%). In the height of winter, other kiwis certainly didn’t opt for a trip to the capital, as North Island visitors dropped spend by -5.7% when compared to the same month last year, and South Island visitors dropped spend by -6.8%.