NZ Electronic Card Transactions - New year cheer - ANZ

New Zealand’s total retail ECT spending rose solidly in January, with reasonable across-the-board growth, notes Phil Borkin, Senior Economist at ANZ.

Key Quotes

“The one soft spot was in non-retail spending, which has contracted for two consecutive months. While the latter needs to be considered when assessing the implications for overall household consumption growth, the figures still highlight that the New Zealand consumer is not down and out, although we are still of the view that given a likely lift in household precautionary saving, overall consumption will grow at a more modest pace over 2018.”

“Key Points

• Retail spending on electronic cards rose 1.4% m/m in January (seasonally adjusted). This follows a 0.6% m/m lift in December, and sees the 3m/3m pace accelerate to 2.6% – the strongest run-rate since 2011. It marks a dramatic turnaround from the contraction seen over the three months to September last year, although in part this will have been driven by the lift seen in petrol prices (fuel retailing posted a 1.5% m/m gain in January, on top of increases of 5.4% m/m and 4.1% m/m in November and December respectively).
• But spending growth was still reasonably broad-based in the month – at least across retail industries. Core spending, which strips out vehicle-related retailing, rose 1.0% m/m after falling 0.2% m/m in December. Durables and hospitality spending growth led the way, rising 1.2% m/m and 1.5% m/m respectively. Consumables spending rose 0.3% m/m, while spending on apparel continues to languish, falling 0.1% m/m on top of a 2.4% m/m fall in December.
• Aside from apparel, the one soft spot was non-retail industries. Services spending fell 1.3% m/m, while non-retail (ex-services) spending fell 1.1% m/m. These are the second consecutive falls in each and mean that total overall ECT spending grew a more modest (but still respectable) 0.6% m/m.”