Discretionary spending picked up in October
Australia Economic Research
New Zealand: detailed retail sales report showed discretionary spending picked up in October
Click here for the full Note and disclosures.
Statistics New Zealand (SNZ) unexpectedly released the October retail sales data last week, the details of which were released this morning. The retail sales numbers were scheduled for released on December 14, but were released Wednesday following data on electronic card transactions, which can be used to derive the retail sales totals. Retail sales values were unchanged in October (J.P. Morgan: 0.1%), slowing from 0.2% in September, and underlying sales were stronger than in the previous month, with ex-auto sales rising 0.5%m/m.
Click to enlarge
The detailed survey released today showed the largest increases in retail sales in October were in cafes and restaurants (+10%), accommodation (+4%), and departments stores (+2%), suggesting a solid rise in discretionary spending over the month. Significant falls were reported in non-discretionary sales, with clothing sales down 7%m/m, supermarket sales down 1%, and fuel retailing down 2%.
The rise in discretionary spending may signal that the positive wealth effect derived from recent house price gains maybe encouraging Kiwis to loosen their purse strings. As Governor Bollard pointed out last week, though, low supply is affecting the housing market, making it unclear to what extent rising house prices will boost consumer spending. Households remain cautious and continue to reduce debt. Add to this the prospect that unemployment will continue to rise and wage growth slow and consumer spending will likely remain subdued in 2010.
Click to enlarge