New Zealand consumers increased spending for a third month in December, emboldened by rising house prices, adding to the case for a faster economic recovery and higher interest rates in 2013.
Spending on credit and debt cards rose 0.5 percent from November, Paymark, which processes three-quarters of all card transactions, said in an e-mailed statement today. House prices in Auckland, home to a third of the nation’s 4.4 million people, rose at the fastest pace in five years, another report showed.
Rising property values and record-low interest rates have boosted consumer confidence, encouraging spending in the weeks before Christmas and in the immediate aftermath when retailers offer large discounts. Central bank Governor Graeme Wheeler kept the official cash rate at 2.5 percent last month and signaled he will be monitoring the economy for signs of emerging pressure on inflation.
“The Auckland housing market is quite strong,” said Craig Ebert, a senior economist at Bank of New Zealand Ltd. in Wellington. “Strong’s good in terms of construction, but not if it just spills over to inflation which seems to be happening up there.”
Eight of 16 economists surveyed by Bloomberg News last month forecast Wheeler will raise borrowing costs this year, probably in the fourth quarter. New Zealand’s currency has gained 2.3 percent the past three months on expectations of faster growth and rate rises. It bought 83.69 U.S. cents at 10:40 a.m. in Wellington.
The average house price in Auckland rose 7.7 percent in 2012 from 2011 levels, according to Barfoot & Thompson, which sells about a third of residential properties in the city. In December, the average price fell from a record high in November and there were 920 sales, the most for a December in eight years, the realtor said in an e-mailed statement.
Card spending last month gained 2.3 percent from a year ago, Auckland-based Paymark said in its report. After adjusting for a greater number of Mondays, which are slow trading days, sales rose 4.3 percent.
“While it’s still tough out there for retailers, the adjusted numbers paint a more realistic picture of what’s going on and reflect an encouraging finish to 2012,” Paul Whiston, head of sales and marketing, said in the statement.
Separately, car registrations in December rose to 6,102 from 5,326 a year earlier, the New Zealand Transport Agency said in an e-mailed statement today.
Consumer confidence rose in seven of 11 regions in the fourth quarter, according to a survey conducted by Westpac Banking Corp. (WBC) and McDermott Miller Ltd. also published today.
“Economic confidence in Auckland shot up from marginally pessimistic to firmly optimistic,” Westpac economist Felix Delbruck said in the report. “The region’s housing market has gone from strength to strength and manufacturing may be starting to see the light at the end of the tunnel.”
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