New Zealand’s retail spending on electronic cards rebounds in January

New Zealand’s retail spending on electronic cards rose sequentially in January following an unexpected weak Christmas period. It was firm throughout the board. The nation’s retail card sales surged 2.7 percent sequentially in January on a seasonally adjusted basis following flat spending in November as well as in December. On a year-on-year basis, sales rose 5.6 percent in the month. Consensus expectations were for a smaller recovery of 0.7 percent sequentially. Core spending, which strips motor-vehicle related spending, rose 2.5 percent sequentially.

Movements were firm across the board. Spending on durables rose 3.1 percent strongly after declining for three straight months, whereas spending on consumables was up 1.3 percent sequentially. Hospitality spending rose 1.7 percent, continuing to outperform with remarkable annual growth of 12.1 percent year-on-year, noted ANZ in a research report. Spending on apparel was up 2.5 percent sequentially. Meanwhile, fuel retailing was consistent with total spending in January, rising 2.7 percent sequentially; however, it is up almost 9 percent in the past three months.

Card transaction prints are highly volatile, as seen in the past three months. It appears that the fourth quarter likely recorded weaker consumption, in line with the possibility that consumer spending restraint would continue. But the leap in January card transactions indicates that a definitive read on the consumer would not be received for some time, stated ANZ.

“We are watching the behaviour of households closely as this will largely determine how quickly domestic inflation pressures lift – as highlighted by the fact that a consumption surprise was one of the alternative scenarios in last week’s Monetary Policy Statement”, added ANZ.

At 6:00 GMT the FxWirePro's Hourly Strength Index of New Zealand Dollar was highly bearish at -110.117, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at -27.7126. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex