New Zealand retail card spending sharply rises 1.4 pct in January, higher than market expectations

New Zealand households started the year off with a bang. Retail spending rose a solid 1.4 percent in January. That was stronger than analysts’ expectations, including on top of market forecast.  

January’s strong rise in spending was underpinned by a lift in durable spending. Stats NZ has attributed this to spending associated with increased purchases of ‘back to school’ supplies, which increasingly include electronic devices. However, we have also seen a second-wind in the housing market that is likely have boosted spending on durable items.

Spending on hospitality was also up, suggesting that New Zealanders were getting out and taking advantage of the hot weather at the start of the year.

With mortgage rates edging down and renewed strength in the housing market, we expect to see continued strength in spending in the early part of 2018. However, this strength is expected to ease back somewhat over the year. In part, this reflects an expected gradual easing of population growth from current strong levels.

"In addition, we expect that the new Government's policies will cool housing demand and in turn will dampen growth in consumer spending," Westpac Research commented in its latest report.

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