New Zealand’s retail card spending rises sequentially in September, implies solid retail spending in Q3

New Zealand’s retail card spending rose on a sequential basis in September, after rising strongly in August. Sequentially, retail card spending rose 1.1 percent. Today’s print indicate towards a considerable bounce in card spending after recent slowdown, implying a strong third quarter for retail spending, noted ANZ in a research report.

Retail spending was solid throughout the board, with consumables and apparel posting solid lifts. Reflecting this widespread strength, ‘core’ retail spending, which excludes motor vehicle-related spending, recorded a seasonally adjusted 1.1 percent sequential rise.

The data released today finishes third quarter on a strong footing, with core and total retail spending rising 2.1 percent quarter-on-quarter and 2.3 percent respectively. It also affirms that ECT has turned higher in trend terms, although the data has fluctuated a lot lately. The trend in retail and core spending rose 0.8 percent and 0.7 percent in September.

At face value, this indicates towards a solid third quarter for consumption and retail activity. But ECT is by no means a perfect indicator; it was very weak last quarter, whereas consumption rose 1 percent quarter-on-quarter. Furthermore, ECT data gives a contrast to business surveys and the ANZ Truckometer, which are giving a subdued signal for the third quarter.

“Nonetheless, at the margin, today’s data temper concerns that the household sector may be reining in their spending in response to financial pressures. Households have benefited from the families’ package and higher minimum wage, but increases in the costs of necessities are providing an offset”, stated ANZ.

At 14:00 GMT the FxWirePro's Hourly Strength Index of New Zealand Dollar was slightly bullish at 61.6842, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at -48.2135. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex