The trend in core retail spending with electronic cards has flattened off in recent months as Christmas approaches, figures released by Statistics New Zealand show.
Electronic card spending was flat in November 2011, Statistics New Zealand said on Friday morning. When adjusted for seasonal effects, the value of transactions decreased 0.2 percent. This followed a 1.8 percent increase in October.
"The 1.3 percent decrease in spending in core retail was particularly noticeable," industry and labour statistics manager Louise Holmes-Oliver said.
"This decrease was not led by any particular industry group, as three of the four core retail industries had falls in November," she said.
In core retail (which excludes the motor vehicle-related industries), the consumables, hospitality, and apparel industries were all down NZ$14 million. Durables (up NZ$2 million) was the only core retail industry where electronic card spending rose in November.
With the motor vehicle-related industries added, spending across all retail industries was down 0.5 percent in November. Of the six retail industry groups, fuel retailing (up NZ$24 million) had the largest rise in the value of transactions. November was the fourth consecutive month of strong rises in this industry, Stats NZ said.
When the two industries outside of retail (non-retail and services) were included, the total value of transactions decreased 0.2 percent.
"Trends for the value of transactions in the total and retail series have been strong in recent months, but the core retail trend has now flattened," Stats NZ said.
ASB said the surge in World Cup spending in October petered out in November:
The 0.5% decline in retail card spending follows on from some strong results over the previous two months. The strength in retail spending over September and October reflected the boost from the Rugby World Cup, and once the effects had been accounted for the results point to a gradual recovery in underlying retail spending. The decline in card spending in November suggest the effects of the Rugby World Cup are short-lived, with declines in card spending in the apparel and hospitality sectors more than reversing the boost in the previous month.
Partly offsetting these declines was another robust increase in spending on fuel. Petrol prices fell slightly over the month, suggesting there has been growth in the volume of spending on fuel in recent months.Today’s result suggests the boost to spending from the Rugby World Cup was brief, with many of the large increases in the categories seen in the previous month reversing out in November. Beyond the effects of the World Cup, we are continuing to see a recovery in underlying retail spending taking place. Whilst we expect this recovery to continue over the coming year, it is likely to occur at a gradual pace in light of the continued high level of household debt.
JP Morgan's Ben Jarman said retail sales had come back to earth after the World Cup.
While the headline spending data seem to be showing the economy losing momentum sharply going into year-end, in our view the reality is less interesting. The trend in retail card sales is running at 0.5%m/m, and this will ease in coming months as the RWC boost fades, but the broader data suggest the economy continues to grow, if only at a subdued pace.
Against this backdrop, and with large downside risks looming offshore, the RBNZ have no urgency to move policy, as was shown in yesterday’s MPS. Maintenance of easy policy will allow households to progress with deleveraging, with the income lift from the construction sector next year to boost spending thereafter.