New Zealand consumer purchases on debit, credit and store cards at retail outlets advanced for a third consecutive month in May, while house prices increased, adding to signs of a domestic economic recovery.
The value of transactions on electronic cards rose 0.9 percent from April, when it increased 1 percent, Statistics New Zealand said today in Wellington. House prices rose 1.7 percent from April when they fell 0.3 percent, according to a separate index published by the Real Estate Institute of New Zealand.
New Zealand’s economy is giving mixed signals, with export volumes, retail sales and home construction falling in the first three months of the year. Stronger consumer spending and property demand may strengthen the case for Reserve Bank of New Zealand Governor Alan Bollard to keep the key interest rate at 2.5 percent for a 10th straight meeting on June 14, with all 16 economists surveyed by Bloomberg News expecting no change.
“Interest-rate sensitive sectors of the economy are now responding,” said Philip Borkin, economist at Goldman Sachs New Zealand Ltd. in Auckland. “This makes the prospects of a near-term interest rate cut from the RBNZ quite unlikely.”
There was a 23 percent chance of a quarter-point cut this week and a 68 percent chance of a reduction by September as at 2:30 p.m. in Wellington, according to interest rate swaps data compiled by Bloomberg. New Zealand’s dollar bought 77.1 U.S. cents from 76.80 cents immediately before the housing report was released.
In May, card spending on fuel jumped 4.6 percent, today’s report showed. Apparel, hospitality and purchases of durable goods such as appliances and furniture also increased. Sales of consumables such as food, which make up 35 percent of retail spending, fell 0.1 percent.
Excluding sales at fuel outlets, car dealers and parts stores, transactions rose 0.8 percent.
Spending on services rose 3.4 percent while purchases of non-retail items such as travel and medical fees also gained. Spending on retail, non-retail and services items combined rose 1.2 percent, the statistics agency said.
The number of credit and debit card transactions rose 4.9 percent in May from the year-earlier month, Paymark, which processes three-quarters of all debit and credit card transactions, said in a separate report on its website today.
House sales rose 24 percent from a year earlier to 7,175 in May, the REINZ said in an e-mailed statement. The time needed to sell a house rose to 38 days from 37 days in April, the report showed.
New Zealand banks last month lowered interest rates on fixed-term home loans as two-year swap rates fell to a record.
May’s sales increase “is considerably stronger than normal seasonal trends would suggest,” REINZ Chief Executive Helen O’Sullivan said in today’s statement. “This is likely partly driven by good deals on interest rates during the month and a desire by buyers to complete purchases before winter.”