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18 Jan 2016

Retail Spending Hits Record High

Retail spending has hit a record high in New Zealand, with Kiwis parting with $6 billion in December alone - the highest ever monthly figure recorded by Statistics New Zealand. Even though figures were down on a monthly seasonally-adjusted basis, record Christmas spending was recorded by both Statistics NZ and Paymark. While retailers will be hoping for similar results over coming months, most experts are expecting the rate of retail spending to drop-off as the year progresses.

According to Statistics NZ, shoppers spent $304 million more in December 2015 than they did in December 2014, an increase of 5.3 percent. While retail spending was down 0.2 percent on a monthly basis after a 0.2 percent rise in November, hospitality and other key sectors contributed to a bumper Christmas period. According to Business indicators manager for Statistics NZ, Clara Eatherley, "While card spending was up in five of the six retail industries in December, a significant fall in the durables industry has lowered overall card spending in the retail sector."

Hospitality and durables were the largest movers in December, with the former up 1.6 percent to $13 million and the later down 1.8 percent to $21 million when compared to the month before. While retail spending dropped 0.2 percent and core retail spending (which excludes vehicle-related industries) fell 0.4 percent in December, spending growth for the entire country was up on a yearly basis. In actual terms, card holders made a record 143 million transactions across all industries in December, with an average of $54 per transaction and $7.7 billion spent in total. 

According to the report: "Retail spending has trucked along at a pretty solid pace over the course of the last year, supported by strong growth in house prices, a large net inflow of migrants, and solid tourist spending. As we head into 2016 we expect the pace of retail spending will gradually start to slow... Regional centres may feel the impact of ongoing belt tightening by farmers, while in Auckland the slowing housing market may prove a headwind for retail spending."

According to a separate report released by Paymark, New Zealanders spent an extra $397 million in December compared to the previous year, with spending up a massive 8 percent to $5.493 billion. The Bay of Plenty contributed to 10.1 percent of this result, followed by Auckland and Northland at 9.2 percent, and Marlborough at 9.9 percent. The weakest spending results in the country were recorded in Taranaki with 0.2 percent and the West Coast with 0.4 percent.

The ANZ Truckometer, a very different way to measure economic growth, uses heavy traffic data to measure economic activity. The ANZ Heavy Traffic Index increased by 2.6 percent in December, with annual growth rising by 4.8 percent. "Santa may have swapped his sleigh for a few 44-tonners this year," said ANZ Senior Economist Sharon Zollner, adding "The Heavy Traffic Index suggests the economy accelerated further in December, rounding out a strong rebound after a dip in the road mid-last year."

Image source: LDprod/