NZ electronic card spending, October 2017: first thoughts - Westpac
Analysts at Westpac offered their first thoughts on the recent Kiwiw data in NZ electronic card spending for October.
- "Total spending: +0.4% m/m (last: 0.0%), +2.3% y/y
- Retail: +0.3% m/m (last: +0.3%, Mkt: +0.5%, Westpac: +0.6%), +1.2% y/y
- Core retail: +0.4% m/m (last: +0.1%), +1.8% y/y
Spending on debit and credit cards eked out a small gain in October. However, the pace of growth in spending has slowed markedly this year as the housing market has cooled.
Retail card spending rose by 0.3%, following an upwardly revised 0.3% rise in September. However, these gains came after declines in six of the seven preceding months. Swings in fuel prices have had something to do with the volatility in card spending, but even core retail spending has been notably more subdued in recent months.
Spending on durables fell 0.5% in October, and is down by about 2% over the last three months. Durables spending is the category most likely to be influenced by the state of the housing market, as people often save large household goods purchases for when they move house.
Spending on consumables was up just 0.1%, and spending on clothing was up 0.3%. The only real bright spot in the October figures was a 1.5% rise in hospitality spending, which in part reflects the strength of tourist arrivals.
We have long argued that consumer spending in New Zealand has a strong link with the housing market. Notably, in yesterday's Monetary Policy Statement the Reserve Bank took the view that this relationship has weakened, and therefore that consumer spending would hold up in the face of the current housing market slowdown. The recent card spending figures suggest otherwise, and they reinforce our view that the Reserve Bank is too optimistic about economic growth in the near term."