New Zealand’s electronic card transactions spending rebound in September

New Zealand’s electronic card transactions spending recovered in September, with widespread gains throughout categories. It rose 1.9 percent sequentially in the month, quite above the consensus expectations and more than the downwardly revised 1.2 percent month-on-month decline in August. Similarly, core spending also rose in September, increasing 2.3 percent month-on-month following a 1.4 percent sequential decline in August.

Gains were widespread in September. Every category recorded a rise in September, just as every category had registered a decline in spending in August. Decent increases were recorded in durables and hospitality spending, which rose 2.9 percent and 2.5 percent respectively. Hospitality continued to claim a larger share of the household wallet. Apparel spending also increased strongly in the month, rising 2 percent sequentially. Fuel retailing rose 1.1 percent, which would partially be related to increased retail fuel prices in September, stated ANZ in a research note.

Nonetheless, while the gains in September seem significant, it has not really changed the underlying scenario. In the September quarter as a whole, the total retail spending growth has actually weakened slightly to 0.8 percent quarter-on-quarter. This is the weakest rate since early 2015; however, it probably reflects lower petrol prices in the quarter. The equivalent measure of core spending remained quite unchanged at 1.4 percent quarter-on-quarter.

The third quarter Retail Trade Survey would give a more evident scenario. The electronic card transaction data signals at a more modest rate of quarterly sales volume growth than seen in the second quarter, which was pretty strong at 2.3 percent q/q.

There are several factors underpinning overall retail spending; however, households are showing more restraint than earlier periods of house price gains and is an important part of why the current account deficit continues to be contained. The restraint is likely to continue, added ANZ.