New Zealand retail card spending rebounded 1.3% month-on-month in July after a 1.4% drop in June, while the services sector held above the 50.0 breakeven mark for a second straight month. The services print offers limited fresh signal for the Reserve Bank of New Zealand's rate path, keeping NZD/USD traders focused on softer employment components underneath the headline figures.
Retail spending bounces back
New Zealand's electronic card retail sales rose 1.3% month-on-month in July, recovering from a 1.4% decline the prior month. On an annual basis, spending grew 3.4%, up from 1.3% previously. Electronic card data covers about 68% of core retail sales in the country and is the main monthly gauge of retail activity.
Food price inflation eased alongside the retail rebound, with the Food Price Index rising 0.1% month-on-month, down from 0.6% growth the prior month.
Services PMI eases but stays above breakeven
New Zealand's services sector expanded for a second straight month in July, with the Performance of Services Index easing to 50.6 from 50.9 in June, according to BusinessNZ. That followed a sharper improvement from May's 48.1 reading, marking the best back-to-back PSI readings in roughly three years, per BNZ senior economist Doug Steel.
BusinessNZ chief executive Katherine Rich called it encouraging to see the index hold above the 50.0 mark for a second month, even as growth eased from June. However, she flagged employment, at 48.5, as the sector's persistent soft spot, sitting alongside Supplier Deliveries as the weakest of the five sub-indices. Firms remain reluctant to commit to new hires, she said, and the recovery is likely to stay modest until consumer confidence firms up further.
Among the five sub-indices, New Orders/Business led at 52.6, followed by Stocks/Inventories at 51.6 and Activity/Sales at 50.5. Respondents cited cost of living pressures, fuel prices, rising interest rates and election uncertainty as the main concerns, with 64% of comments negative.
What it means for the kiwi
The services print offers limited fresh signal for the RBNZ's rate path, remaining consistent with tepid but positive momentum rather than a sharp turn. NZD traders are likely to look past the headline PSI dip given how marginal it was, focusing instead on the weak employment and supplier deliveries components. That combination keeps the case alive for further RBNZ easing later in the cycle, even as a second straight month above breakeven caps the more bearish kiwi dollar narratives for now.
Sources: Investinglive, Investinglive
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