Retail spending made through electronic cards in New Zealand declined 0.3 percent on a sequential basis in May 2016, said Statistics New Zealand on Friday. It was lower than the consensus projection of a rise of 0.5 percent m/m. Meanwhile, core retail spending, which excludes the vehicle-related industries, dropped 0.1 percent in May 2016, as compared with 0.3 percent growth in the prior month. On a year-on-year basis, retail spending rose 3.3 percent y/y.
Most of the drop registered in May is a natural response after certain large gains recorded in April, said Westpac in a research report. Much of the drop in the total spending was attributed to non-retail/online spending and services. These categories had registered quite a large increase in April.
According to Statistics New Zealand, on an underlying trend basis, the total and core retail spending are expanding at 0.4% and 0.2% on sequential basis run-rate respectively. This is not quite strong, but is not negative either. On a 3m/3m basis, total retail spending was up 1.1 percent, whereas core retail spending was up 1.5 percent. On an annual basis, retail spending in the past three month compared with the same period last year, grew 5.6 percent y/y, whereas core spending was up 6.9 percent.
Delving into details, the overall weakness in retail spending was mainly driven by declines recorded in fuel and hospitality spending. Fuels dropped 1.5 percent m/m, while hospitality declined 0.7 percent m/m. Both the declines are going against recent trends. Fuel retailing recorded decline in spite of a rise in petrol prices over the month. The weakness in hospitality spending came after a series of strong growth. The annual growth in hospitality is still more than 12 percent. Meanwhile, spending on consumables grew 0.4 percent m/m, whereas on durables it was majorly unchanged at 0.1 percent m/m.
The data released on Friday is just a partial measure of retail spending trends, noted ANZ in a research report. The Retail Trade Survey provides a much clearer picture. A reasonable spending growth rate is expected to be been seen in the second quarter with consumer spending being continuously underpinned by several tailwinds such as solid employment, low interest rates, a resurgent housing market, and strong credit growth, said ANZ.
