NZ: Total retail ECT spending retreated modestly in February - ANZ

After a strong lift in January (and a decent run of growth prior to that), New Zealand’s total retail ECT spending retreated modestly in February, led by a drop in consumables and fuel spending.

Key Quotes

“We don’t want to overstate the weakness, as a pull-back was always on the cards at some stage, but it is consistent with our broader views on household spending that we expect to develop over the course of 2018. With house price growth set to be more modest, we see households looking to rebuild saving rates, therefore keeping spending growth contained.”

“Key Points

• Retail spending on electronic cards fell 0.3% m/m in February (seasonally adjusted). This follows a strong 1.4% m/m lift in January, and a monthly pace of growth of 0.8% m/m over the preceding five months. Therefore, and especially given the inherent volatility in this series, some degree of pull-back was always on the cards (no pun intended). On a 3m/3m basis, the pace of growth is still sitting at a strong 2.3% run-rate.
• Compositionally, the fall was led by consumables and fuel. Spending on consumables fell 0.5% m/m, which is the first monthly fall since May, while fuel retailing dipped 0.4% m/m after three months of solid increases. Spending on durables and hospitality were both flat in the month (after strong lifts in January), while apparel spending eked out a 0.3% m/m lift, only partially retracing weakness over the prior two months. ‘Core’ retail ECT spending, which strips out motor vehicle-related spending, rose 0.3% m/m, after a 1.0% m/m lift in January. 
• Non-retail ECT spending had a better month. Spending on services and other non-retail industries rose 1.1% and 0.7% m/m in February, after both falling in the prior two months.
• Even with today’s fall, Q1 is shaping as another reasonable quarter for overall retail spending. It would take a decent fall in spending in March for the ECT figures not to imply another solid quarter for overall retail spending. In Q4, the Retail Trade Survey showed total retail sales volumes up 1.7% q/q.”