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Shoppers splashed out more than ever before over the Christmas period, with 16% of electronic card spending going towards eating out 

Shoppers splashed out more than ever before over the Christmas period, with 16% of electronic card spending going towards eating out 

We were more swipe happy than ever before over the Christmas period, with winers and diners spending up particularly largely.

Total retail spending using electronic cards hit a record $6.5 billion last month - a 5.8% rise from December last year, according to Statistics New Zealand.

The largest industry increase came from hospitality, where spending was up 13.4% to $1.1 billion. In fact, a whopping 16% of retail spending in December went towards hospitality.

"This is the first month card spending in hospitality exceeded $1 billion," Stats NZ business indicators manager Tehseen Islam says.

"The higher hospitality spending coincides with a period of rising international tourism and residents enjoying Christmas and New Year holiday breaks."

Compared to November 2016, spending rose 24.5%.

Seasonally adjusted figures paint a more subdued picture

However, on a seasonally adjusted basis, electronic card spending was unchanged, falling 0.1% in December, following a 0.1% drop in November.

Using this measure, retail spending was also lower than market expectations.

ASB economist, Daniel Snowden, says: “We expect the recent weak headline results to be a blip and continue to expect spending growth to remain firm, supported by high net migration, dairy’s recovery and low interest rates.

“Spending delivered a surprise in December, with another negative result when the market was looking for a bit of a bounce-back following November’s disappointment.

“Durables was again the main culprit, down 1.4% month-on-month, and there has only been one positive month (September) in the last 6 months. Given firm construction, durables should be on the way up as those new builds need to be fitted out.

“However, it should be noted that at an absolute level, spending on durables remains around recent highs and that it is the growth in spending that has been slow.

“Consumables also took a backward step in December (seasonally-adjusted) but spending in this area remains only-just shy of its all-time high and a spot of consolidation is no bad thing.

“The tourism boom shows little sign of slowing, with hospitality spending rising 0.5% month-on-month to take the index to a new all-time record high. This despite the fallout from November’s earthquake which at this stage looks to have displaced activity, rather than discouraged it.

"Apparel surprised to the upside, expanding 1.3% month-on-month although that does follow November’s surprise 3.1% drop.

"As expected, fuel spending growth expanded, at 4.4%, in line with increased fuel costs."

Credit card usage on the rise

Digging into the details of the data, while people are spending more altogether, the size of the average transaction is lower.

In December, the average value per transaction was $54 - the same as December last year.

Yet in the December quarter, the average was $50 - a drop from the same period in 2015, 2014, 2013 and 2012.  

Furthermore, an increasing portion of transactions are being done using credit cards rather than debit cards.

Credit card transactions accounted for 48.1% of transactions in the December quarter - an increase from 46.1% in the same period in 2015, 44.4% in 2014 and 43.7% in 2013.

Electronic transactions

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The 'Electronic transactions yoy change %' chart will be drawn here.
The 'Average value per transaction $' chart will be drawn here.
The 'Retail industry values yoy change %' chart will be drawn here.
The 'Core retail industry values yoy change %' chart will be drawn here.

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"ASB economist, Daniel Snowden, says: “We expect the recent weak headline results to be a blip and continue to expect spending growth to remain firm, supported by high net migration, dairy’s recovery and low interest rates."

More like eye watering household debt supporting spending as opposed to the above.

Thanks Jenee. I recently did a little exercise on the S7 series of total bank debt. The RBNZ kindly supply the debt figures and the average interest rate, by year; so I added a column showing total interest paid each year. My hypothesis is that all the RBNZ does is modulate the interest rate to a level that kiwis can afford, thus ensuring that the interest load (tribute payment to Australia?) stays roughly constant. So the interest rate is determined by the debt load.

For example, in the year to Aug 2016, the total bank debt was $422,046 billion and the average interest rate was 4.92%, giving a total interest paid figure of $20,765 billion per annum. The results make an interesting graph. You might like to explore the subject yourself.

Why the RBNZ don't actually graph the total interest paid is an interesting question too. Perhaps because their cult of solemn complexity would be exposed as a sham? Or am I being unfair?

I think you're right with respect to the interest paid. I tend to hover over the S8 figures to see where the interest rate reversal happens. My guess is some time in the next few months when the last of the high 2-3 year fixed interest mortgages are refinanced, and mixed with the increasing interest rates.

The household debt graph seems to have some leverage effect. I suspect once we end up at 7% interest rates (whenever that may be) that debt servicing will become a major cost. A major cost that RBNZ cannot control because who cares about the OCR.

We could have problems before then as it looks like the UK, EU and US asset bubbles are primed to collapse in the next few years. Our banks are too dependent on foreign borrowing to not be impacted by an overseas event.

Yes, it seems to me that household debt is what drives NZ. I went to S7 because it has a bigger picture, and I was quite surprised at the size of the totals. A few highlights:

Year to Dec 2004 Total bank debt $204,639 billion at 7.41% giving $15,164 billion interest paid
Year to Oct 2008 Total bank debt $318,140 billion at 8.89% giving $28,283 billion interest paid
Year to Apr 2010 Total bank debt $314,471 billion at 6.20% giving $19,440 billion interest paid

Seems a pretty simple way to look at it, based on real debt figures and interest payments not conjured statistical mumbo jumbo artificial constructs like "inflation" or "GDP".

Absolutely. I look at S8 due to the bulk lending and the effect I suspect it will have.

Our credit card debt is a large figure with some large interest rate charges. Those that come forward for help in relation to their debts (I help people in the US mostly) it's not just their mortgage but payments on car loans and credit cards that are out of control. With 39% of people in the US spending more than they earn I'd love to know what the same statistic is in NZ.

e: a lot of people's finances were broken in 2008 and I saw a lot of businesses fold.

Nov 2016 we have $429b total debt and $20.73b in interest. We only need to reach 6.52% interest to hit the $28b breaking point from last time.

Yes this is a very good method of measure. To put it in even better context we could compare with household income growth over said period.

When the household debt graph is updated RBNZ includes an income adjustment for the first update for the year. It will be quite telling.

My quick calculation is oversimplified but it gives an interesting indicator to examine at a later date.

Roger... Maybe, add to that, the Global Capital investment flows, that might trickle our way and is invested directly ... ( which still keeps it simple ).

Most important metric might be the debt service/ disposable income... ( rapid growth in that metric is probably one of the best precursors of a potential financial crisis.... in my view )... Also.. growth in total private sector DEBT/GDP as a metric.

All these people screaming about the "Bubble" in real estate and its' imminent collapse might want to ponder that chart.. (that Jenee posted )
ie... we are not at a tipping point..... yet. ( In regards to a financial crisis... )

One mans spending is another mans' income ... ( we are all affected by the distortionary effects of growth thru debt )

Also.... still keeping it simple,..... it is also important to know where the growth in debt is going:
A/ Productive Investment
B/ Consumer spending
C/ Speculation..

( as far as I know.... these are the only 3 places it can go..??? )

Productive investment! Surely not.

I was thinking along the same lines MikeM. Wage growth from memory isn't stellar and we aren't saving more, so the average Joe has to be funding their spending from increasing debt (using the house as an ATM) or by selling assets.

I get sick of the banks and government wheeling out the same crap everytime they want to push the headline numbers. The spin on the data depends on where one stands (or benefits) in the grand scheme of things.

We can look even further back in time and conclude that these massive financial bubbles are a recent phenomenon that did not occur in the pre-Greenspan era. Household net worth used to be around three times NGDP and would occasionally trade a standard deviation away from its mean, but ultimately revert back. With Greenspan at the helm things changed because along with him came a new group of academics arguing, as Keynes before them, that a semi-boom could be maintained indefinitely. Keynes argued it could be achieved through intelligent fiscal policy, while the new breed of hacks now claimed monetary policy guided by scientific method would ensure eternal bliss. In the beginning it even seemed to work, but people fail to understand that expanding the medium of exchange only redistribute capital away from wealth producers to wealth consumers. It is like having a party on your credit card; fun while it lasts, but only help make you poorer over the longer term.

And eventually we must return to being wealth producers. Can't grow with credit forever.