New Zealand’s retail spending on electronic cards falls again in December

Retail spending on electronic cards in New Zealand declined in December, with the underlying trend moderating. Retail spending eased 0.1 percent sequentially on a seasonally adjusted basis, following a similar-sized decline in November. Consensus projection was for a decent recovery from the weakness seen in November. Hence today’s data represents a significant downside surprise. Core spending, which strips motor-vehicle related spending, fell 0.8 percent sequentially.

Movements, from a compositional perspective, were mixed. Durables spending dropped 1.4 percent, falling for the third straight month, whereas consumables spending also fell in the month. This was partially countered by a modest rise in hospitality spending that continues to outperform and a partial recovery in apparel spending after November’s sharp decline. A decent rise in fuel retailing accounts for the outperformance in total retail spending, stated ANZ in a research report.

The decline in December might not usually be alarming. Card transaction figures are quite volatile so a decline in any particular month is something that would not grab much attention. But as it follows the softness in November, it raises some eyebrows. On a three month-on-three month basis, core spending values rose just 0.6 percent, which is the weakest since a small soft patch in mid-2015. It indicates towards the likelihood that after a period of solid growth for the retail sector, fourth quarter was weaker. This might be in line with consumer spending restraint persisting, said ANZ.