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BNZ Town and Country Report - March 2005

BNZ Town and Country Report - March 2005

TOWN & COUNTRY REPORT FARMER SPENDING MILDLY IMPROVES IN FEBRUARY •

In February both farmers and city-folk cut spending from January levels by about the same amount –3.8% and 3.9% respectively. But in seasonally adjusted terms both results were reasonably strong at +1.6% for farmers and +1.0% for urbanites. • Over the past year farmers have shown particularly strong spending growth relative to townies in the areas of liquor, hardware, furniture and department stores.

Over the year ending in February 2005 spending by BNZ debit and credit card holders living in rural areas amounted to approximately $763m while spending by city-based card holders was $3.3b. After adjusting for variations in the numbers of card holders these results were increases of 7.8% and 6.7% respectively. Last month we noted a trend toward reduced relative spending growth for farmers in monthly data.

This trend is still apparent but not a strong one – as indicated by February’s faster growth for farmer spending than urbanite spending noted just above. After adjusting for seasonal factors we find that in the three months to February city spending was up

0.5% while farmer spending was up 0.1%. Three months earlier these rates of change were 1.0% and 1.4% respectively. The recent gap in spending growth is reversing. ] Three month changes Rural Out-performance

TOWN & COUNTRY CONSUMER SPENDING GROWTH % Rural Under-performance Trendline Our expectation is that the rate of growth in both urban and rural retail spending will ease off over 2005 in response to above average interest rates, static to falling house prices, easing net inward migration flows, an over-valued exchange rate, and easing commodity prices.


STORETYPE BREAKDOWN

The debit and credit card spending data can be broken down on a storetype basis. The level of volatility in monthly and especially storetype data means one should focus on three month smoothed changes at best rather than monthly variations. Looking just at storetype spending changes in the year to February 2005 versus the year to February 2004 we find the following significant variations.

Urban consumers have shown significantly greater growth in spending in fresh meat, fruit & vegetables up 10.6% versus 5.1% for farmers, appliances at 10.6% versus 7.7%, chemists at 3.7% versus 1.2%, automotive fuel at 13.3% versus 11.4%. Farmer spending growth has outpaced urban spending growth in almost all other categories over the year but most notably liquor, hardware, furniture and department stores. 3 mths to February Year to February 05 $m in vs. 3mths to November vs. year to February 04 year City Rural City Rural All NZ

Supermarket and grocery 3.6 3.0 0.1 3.2 1780

Fresh meat, fruit etc 20.8 17.2 10.6 5.1 58

Liquor 18.7 22.6 -1.6 7.1 143

Other food -4.3 -3.2 4.7 9.0 38

Takeaway food -0.5 2.9 17.0 15.1 59

Department stores 13.9 12.5 1.7 4.7 570

Furniture and floor coverings -5.2 -7.7 3.0 6.0 211

Hardware 6.9 1.1 4.5 9.9 289

Appliances 17.1 21.0 10.6 7.7 253

Recreational goods 23.9 19.0 0.1 1.7 338

Clothing and softgoods -0.1 -1.0 1.8 3.1 443

Footwear 1.1 -2.5 2.3 2.6 66

Chemist 0.3 2.3 3.7 1.2 148

Household equipment repair -2.1 -1.2 15.2 58.6 9

Other retailing 10.6 11.0 8.4 10.6 269

Accommodation 23.6 14.2 0.1 1.5 192

Bars and clubs 4.1 6.7 9.1 9.2 63

Cafes and restaurants 7.1 8.5 7.2 8.4 314

Personal and household hiring 3.0 7.2 12.6 19.4 14

Other personal services -1.8 -0.5 8.0 7.4 122

Ex-auto 7.3 6.3 2.8 4.8 5379

Auto Fuel -0.9 -2.6 13.3 11.4 494

Elec. services, smash repair 0.5 -2.3 2.6 5.8 57

Auto repair & services -0.4 1.2 11.3 11.1 140

All 6.4 5.3 3.7 5.5 6070

About BNZ.MarketView: Analysis in this commentary is based on data from BNZ.MarketView, a product that is a collaboration between Bank of New Zealand and MarketView Ltd. BNZ.MarketView analyses approximately seven million transactions that are made by Bank of New Zealand debit card and credit customers per month.

BNZ.MarketView covers transactions undertaken with about 60,000 retailers and with a monthly value of approximately $0.5 billion. BNZ.MarketView data – which can be analysed in multiple ways, including store type and area – is available for purchase by retailers and other organisations that are seeking the latest and fastest data. Enquires to Bank of New Zealand, ph 0800 737 774. www.bnz.marketview.co.nz.

This publication has been provided for general information only. Although every effort has been made to ensure this publication is accurate the contents should not be relied upon or used as a basis for entering into any products described in this publication. BNZ strongly recommends that readers seek independent legal/financial advice prior to acting in relation to any of the matters discussed in this publication.

Neither the Bank of New Zealand nor any person involved in this publication accepts any liability for any loss or damage whatsoever that may directly or indirectly result from any advice, opinion, information, representation or omission, whether negligent or otherwise, contained in this publication.

ENDS

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