Praneeta Mahajan
Hamilton, February 19, 2024
Card spending over January showed some life after very subdued numbers in December. Durables, apparel, and fuel all rebounded in seasonally-adjusted terms.
In actual terms, cardholders made 165 million transactions across all industries in January 2024, with an average value of $56 per transaction. The total amount spent using electronic cards was $9.2 billion.
The figures are adjusted monthly, and hence the latest reports cover a holiday-affected month. The New Zealanders’ holiday (and associated spending) activities have gone through changes over the past few years, which makes seasonal adjustment more difficult.
The figures include spending by overseas tourists during peak season, though the peak has also been shifting in recent summers as inbound tourism has built up after the border opened. Black Friday sales also influenced spending patterns late in the year, adding to the positive movement in numbers.
Refresher
A sharp fall in card spending during December
January 2024 month
Changes in the value of electronic card transactions for the January 2024 month (compared with December 2023) showed that spending in the retail industries increased 1.7% ($114 million) as per a report issued by Stats NZ. The was also a visible increase in spending for the core retail industries by 1.9% ($109 million).
By retail spending category, spending on durables went up by 1.8% ($28 million) Apparel was up by 3.1% ($10 million), Consumables were up by 0.4% ($9.3 million) Fuel spending was up by 1.6% ($9.1 million) and motor vehicles spending, excluding fuel, was up by 0.9% ($1.8 million).
The non-retail category excluding services, increased by 2.7% ($60 million) from December 2023. This category includes medical and other health care, travel and tour arrangements, postal and courier delivery, and other non-retail industries.
The services category was down by 0.4% ($1.5 million). This category includes repair and maintenance, personal care, funeral, and other personal services.
The total value of electronic card spending, including the two non-retail categories (services and other non-retail), increased from December 2023, up by 2.0% ($187 million).
A statement issued by Stats NZ stated, “Due to the effect of Covid-19 on tourism, we are unable to release seasonally adjusted figures for the hospitality category. As such, we are focusing on the actual hospitality values for this release. We will continue to monitor this approach as more data becomes available.”
Spending in the hospitality category increased 1.9% ($24 million) between January 2023 and January 2024, but Hospitality spending fell 5% after the Christmas-related 10% surge seen in December 2023.
Not all good news
Stepping back, the trend in spending remains muted, with spending values largely going sideways since mid-2023. Bearing in mind that annual inflation is running around 4.5% and population growth around 3%, annual card spending of 4.1% in total (and 1.6% for the retail segment) implies continued contraction in per-capita card spending volumes.
In a recent report issued by ASB, economist Nathaniel Keall said, “Services spending (not as well represented in the card transactions as goods are) has tended to fare better as consumers have prioritised their tight budgets. Even so, we expect overall consumer spending volumes to remain negative on a per-capita basis.”
“The rebound in card spending will not ease the RBNZ’s worries about whether or not it will bring inflation under control sufficiently for its liking. Nevertheless, we still expect the RBNZ to remain on hold: monetary policy is continuing to hold back spending. And it will remain a challenging environment for consumers. The average mortgage rate being paid by borrowers is still edging up, even if some mortgage rates are below their 2023 peak. Cost of living pressures remain high, even if they are starting to ease,” said Mr Keall.
Irregular patterns
Stats NZ, in their report, mentioned that “although COVID-19 has introduced unusual patterns to the monthly and quarterly electronic card transaction series, we are confident in the seasonal adjustment of the core retail, total retail, and total card-spending series. We are also confident in the seasonally adjusted figures for the consumables and durables industries for the December 2020–January 2024 months.”
Praneeta Mahajan is an Indian Newslink reporter based in Hamilton.
