September 17th, 2024
The latest data from Statistics New Zealand indicates a downturn in retail spending for February 2024, revealing a notable decrease in electronic card transactions across various sectors. The statistics show a 1.8 percent decrease in spending within the retail industries, translating to a $120 million reduction compared to January 2024.
The big picture: This decline is part of a broader trend affecting the core retail industries, which saw a 1.4 percent decrease, equalling an $83 million drop. The electronic card transactions (ECT) series, encompassing debit, credit, and charge card transactions with New Zealand-based merchants, offers insights into consumer spending patterns and economic activity, without adjustments for price changes.
Zoom in: Sector-specific impacts
Consumables: Experienced a decrease of $23 million (0.9 percent).
Fuel: Saw a reduction of $21 million (3.7 percent), reflecting global energy market dynamics.
Durables: Dropped by $15 million (0.9 percent), indicating potential consumer caution.
Apparel: Declined by $5.1 million (1.5 percent), while motor vehicle spending (excluding fuel) marginally increased by $0.7 million (0.3 percent).
Notably, the non-retail (excluding services) sector faced a $55 million decrease (2.4 percent), including industries such as medical and health care, travel arrangements, and postal services. Conversely, the services category witnessed a slight increase of $5.1 million (1.5 percent).
What's happening: The total value of electronic card spending, including services and other non-retail categories, saw a downturn of $176 million (1.9 percent) from January 2024. The analysis excludes the hospitality category due to COVID-19's impact on tourism, with plans to resume seasonally adjusted figures in future releases. However, hospitality spending in actual terms showed an encouraging surge of 8.6 percent ($101 million) year-over-year.
Why it matters: February 2024, benefiting from an extra trading day due to the leap year, recorded 160 million transactions with an average value of $55 each. The total expenditure via electronic cards reached $8.8 billion, marking a 4.9 percent increase ($409 million) from February 2023.
Seasonal adjustment: Statistics New Zealand has highlighted the disruptions caused by COVID-19, which introduced unusual patterns to electronic card transaction data from March 2020 to early 2022. As the data begins to normalize, analysts are advised to interpret seasonally adjusted figures with caution.
The bottom line: Looking ahead, the next electronic card transactions report, due on 12 April 2024, will introduce enhancements to the seasonal adjustment methodology, including an automatic additive outlier detection for more accurate calculations. This update aims to refine data analysis and provide clearer insights into New Zealand's economic landscape amidst ongoing global uncertainties.