Stark differences in retail spending growth seen throughout New Zealand

New Zealand’s retail spending has been expanding at a stronger pace. In the past year, retail sales have increased by 4.5 percent in nominal terms. Sales have been up by 18 percent since 2012. Moreover, with inflation continuing to be quite low in recent years, the huge majority of these rises are because of additional goods being sold, rather than just increases in price, noted Westpac in a research report.

But in relation to other indicators of household sector activity, such as house prices, recent growth in spending has actually been slightly weaker than anticipated. There seems to be certain stark differences throughout the nation.

In Canterbury and in Auckland, spending has increases robustly, in line with the strength in their respective labor markets, strong levels of economic sentiment and population growth. Other than those factors, spending in Auckland has been underpinned by solid growth in the housing market, whereas spending attributed to reconstruction has stimulated the economic conditions in Canterbury.

Meanwhile, spending outside of the main centers has been expanding; however modestly. Moreover, in smaller centres in the North Island, spending has been slightly weaker than anticipated given that the house price inflation has rebounded and tourist figures have been increasing, said Westpac.

In several smaller regions, growth in employment has remained weak, while consumer sentiment has stayed subdued as well. Moreover, several consumers in rural regions would have found their financial positions crammed in recent years due to weakness in commodity prices and the strength in the New Zealand dollar.

When compared to other regions, growth in spending in Wellington has remained weak. That is especially surprising given the growth in workers’ average earnings in the region and the rebound in house price inflation. It might show the relatively flat job market in Wellington in recent years, according to Westpac.