Retail spending via electronic cards hit a record of $6.037 billion in December, with swipe happy consumers spending 5.3% more than they did in December 2014.
Statistics New Zealand figures show retailers enjoyed 6.0% more transactions during the month compared to December 2014, with the value of each transaction averaging $54.
The boost came largely off the back of increased spending on hospitality – accommodation, bars, cafes and restaurants, and takeaway retailing – which was up 13.1% from the same month the previous year.
Spending on vehicles increased by 10.8%, apparel 7.6%, consumables 6.3%, and durables 1.2%. The global oil glut saw spending on fuel decrease by 0.3%.
Westpac senior economist Anne Boniface notes, “One area where growth in spending has softened noticeably in recent months is in spending on durables.
“It may imply weaker prices in this sector. Alternatively, it could signal that slower turnover in the housing market in recent months (particularly in Auckland) has weighed on spending on durables (or some combination of the two).”
Stats NZ figures also show retailers made a slightly higher proportion of transactions using credit cards, than in December 2014.
In December 2015, 54.0% of transactions were done via debit card (54.3% in 2014), while 46.0% were done via credit card (45.7% in 2014).
Boniface says, “Retail spending has trucked along at a pretty solid pace over the course of the last year, supported by strong growth in house prices, a large net inflow of migrants, and solid tourist spending.”
Less rosy
However the picture is less rosy, looking at the figures from a seasonally adjusted point of view.
The value of retail card spending was down 0.2% in December, from November, following a 0.2% rise in November.
ASB economist Kim Mundy says this decline is surprising, given anecdotes of particularly strong spending over December.
“This reading is not consistent with recent trends we have seen developing in electronic card spending,” she says.
“While slightly concerning, we expect spending growth to recover over 2016.
“Record low interest rates, record high net migration and strong tourist inflows will support spending levels going forward.
“However, a slowing labour market, falling dairy prices (and dairy-related incomes) and lower Auckland housing turnover will remain key risks to spending levels for some time.
“On balance, we expect the boost to spending from low interest rates, population growth and tourism to outweigh these downside risks.”
Westpac isn’t as optimistic looking ahead.
Boniface says, “As we head into 2016 we expect the pace of retail spending will gradually start to slow. Regional centres may feel the impact of ongoing belt tightening by farmers, while in Auckland the slowing housing market may prove a headwind for retail spending.”
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