Consumer Spending Series M A Y 2 0 0 5
Economic commentary on retail spending in New Zealand by Tony Alexander, Chief Economist, Bank of New Zealand
Friday 10 June
RETAIL SPENDING RISES AGAIN IN MAY
• Spending by BNZ debit and credit card holders in seasonally adjusted terms is estimated to have risen 1.3% in May.
Following our estimate of a 1.3% rise in retail sales in April this suggests a rebound in growth after a flat result in
March.
• High performing regions recently have been Northland, Waikato, Gisborne, Canterbury and Southland, while spending
restraint is evident in Auckland, Taranaki, Wellington and Nelson.
• In unadjusted terms ex-auto sales in May were estimated to be up 11.0% from a year ago, from 9.3% annual growth in
March.
Consumer confidence is weak according to monthly measures – though not according to the more detailed Westpac McDermott
Miller survey. This latter survey which showed confidence at its second highest level since 1994 in the March quarter
appears to be more accurate because our data suggest that after high strength in retail spending over January and
February and a lull in March, spending improved firmly again in both April and May by just over 1%. This strength could
reflect continued confidence in the housing market which is easing from its cyclical peak only gradually, and a tight
labour market boosting expectations of continued employment and wage rises.
CONSUMER SPENDING PROSPECTS
Boosted by rising house prices, above average population growth, strong residential construction, people shifting into
higher paying jobs, rising expectations of wage rises, and strong rural incomes we have seen high strength in retail
spending since the second half of 2001. Last year proved much stronger than generally expected – perhaps because of
borrowers shifting to low fixed interest rates and avoiding pain from tightening monetary policy, extra strength in
house prices, and a further jump in commodity prices.
However over the coming two years we expect leaner times for retailers, though with little prospect of the sort of rout
which occurred over 1997-98 when the economy was in recession. Downward pressure on spending growth is likely from the
following.
• Below average population growth caused by net migration inflows evaporating.
• Above average interest rates.
• Falling non-pastoral export incomes due to a high exchange rate.
• Ending of a cyclical period of consumer spending on durable goods.
• Downturn in house prices, turnover and construction.
SPENDING BY REGION
The first graph below shows the unadjusted change in retail spending in the three months to May from the previous three
month period ending in February 2005. NB. All regional data are adjusted in three ways.
• Changes in BNZ card holder numbers month to month are removed as these can sometimes vary widely from one region to
another.
• The effects of divergent population growth get stripped out by the above adjustment so population changes estimated by
Statistics NZ are added back in with an estimate made for growth beyond June 2004 – the latest period for which SNZ
estimates are available.
• Growth rates are scaled to match annual growth calculated in the above nationwide analysis. The high performers have
been Northland, Waikato, Gisborne, Canterbury and Southland, while spending restraint is evident in Auckland, Taranaki,
Wellington and Nelson.
An alternative comparison is of the latest three months compared with the same three months a year ago. This gives the
following graph showing weak annual growth for Auckland, Taranaki, Nelson and the West Coast, but high strength in
Northland, Waikato, Wellington, and much of the South Island.
NORTHLAND
• Spending Out-Performance
Northland region BNZ debit and credit card holders spent $8.9m on retail goods in May, $27m in the three months to May,
and $104m in the year to May. Annual spending was 2.1% of total NZ card expenditure. In the three months to May spending
in the region was up 9.0% from a year ago compared with a nationwide rise of 8.5%. Year to May growth was 8.8% versus
7.5% nationwide. Compared with the three months to February spending was down 4.6% versus a 6.2% fall nationwide. The
data suggest good strength in retail spending in the region recently.
AUCKLAND
• Spending Growth Under-Performs
Auckland region BNZ debit and credit card holders spent $119m on retail goods in May, $360m in the three months to May,
and $1.4b in the year to May. Annual spending was 29.3% of total NZ card expenditure. In the three months to May
spending in the region was up 7.8% from a year ago compared with a nationwide rise of 8.5%. Year to May growth was 6.4%
versus 7.5% nationwide. Compared with the three months to February spending was down 6.2% versus a 6.2% fall nationwide.
The data suggest below average strength in retail spending in the region over the past year.
WAIKATO
• Above Average Spending Growth
Waikato region BNZ debit and credit card holders spent $40m on retail goods in May, $121m in the three months to May,
and $473m in the year to May. Annual spending was 9.7% of total NZ card expenditure. In the three months to May spending
in the region was up 10.5% from a year ago compared with a nationwide rise of 8.5%. Year to May growth was 9.2% versus
7.5% nationwide. Compared with the three months to February spending was down 4.4% versus a 6.2% fall nationwide. The
data suggest well above average strength in retail spending in the region over the past year.
BAY OF PLENTY
• Slightly Above Average Growth
Bay of Plenty region BNZ debit and credit card holders spent $27m on retail goods in May, $82m in the three months to
May, and $327m in the year to May. Annual spending was 6.7% of total NZ card expenditure. In the three months to May
spending in the region was up 8.9% from a year ago compared with a nationwide rise of 8.5%. Year to May growth was 8.2%
versus 7.5% nationwide. Compared with the three months to February spending was down 5.9% versus a 6.2% fall nationwide.
The data suggest marginally above average strength in retail spending in the region over the past year.
GISBORNE
• Spending Strength Now Above Average
All economic data for the Gisborne region need to be treated carefully and smoothed over many months where possible
given the small numbers being dealt with. Taking that caveat into account we note the following. Gisborne region BNZ
debit and credit card holders spent $3m on retail goods in May, $9.3m in the three months to May, and $37m in the year
to May. Annual spending was 0.8% of total NZ card expenditure. In the three months to May spending in the region was up
9.2% from a year ago compared with a nationwide rise of 8.5%. Year to May growth was 6.3% versus 7.5% nationwide.
Compared with the three months to February spending was down 4.7% versus a 6.2% fall nationwide. The data suggest
marginally above average strength in retail spending in the region in recent months after a below average year.
HAWKES BAY
• Spending Improves
Hawkes Bay region BNZ debit and credit card holders spent $13m on retail goods in May, $41m in the three months to May,
and $163m in the year to May. Annual spending was 3.3% of total NZ card expenditure. In the three months to May spending
in the region was up 8.5% from a year ago compared with a nationwide rise of 8.5%. Year to May growth was 6.4% versus
7.5% nationwide. Compared with the three months to February spending was down 5.2% versus a 6.2% fall nationwide. The
data suggest marginally above average strength in retail spending in the region in recent months after an average year.
TARANAKI
• Spending Growth Below Average
Taranaki region BNZ debit and credit card holders spent $7.7m on retail goods in May, $23m in the three months to May,
and $93m in the year to May. Annual spending was 1.9% of total NZ card expenditure. In the three months to May spending
in the region was up 7.4% from a year ago compared with a nationwide rise of 8.5%. Year to May growth was 7.2% versus
7.5% nationwide. Compared with the three months to February spending was down 6.9% versus a 6.2% fall nationwide. The
data suggest marginally below average strength in retail spending in the region in recent months.
MANAWATU/WANGANUI
• Average Spending Growth
Manawatu-Wanganui region BNZ debit and credit card holders spent $20m on retail goods in May, $61m in the three months
to May, and $242m in the year to May. Annual spending was 4.9% of total NZ card expenditure. In the three months to May
spending in the region was up 7.7% from a year ago compared with a nationwide rise of 8.5%. Year to May growth was 6.9%
versus 7.5% nationwide. Compared with the three months to February spending was down 6.3% versus a 6.2% fall nationwide.
The data suggest about average strength in retail spending in the region in recent months and the past year.
WELLINGTON
• Spending Growth Easing Off
Wellington region BNZ debit and credit card holders spent $62m on retail goods in May, $189m in the three months to May,
and $760m in the year to May. Annual spending was 15.5% of total NZ card expenditure. In the three months to May
spending in the region was up 8.9% from a year ago compared with a nationwide rise of 8.5%. Year to May growth was 8.5%
versus 7.5% nationwide. Compared with the three months to February spending was down 7.7% versus a 6.2% fall nationwide.
The data suggest above average strength in retail spending in the region in the past year has faded in recent months.
NELSON/MARLBOROUGH/TASMAN
• Spending Restraint Evident
Nelson region BNZ debit and credit card holders spent $13m on retail goods in May, $41m in the three months to May, and
$163m in the year to May. Annual spending was 3.3% of total NZ card expenditure. In the three months to May spending in
the region was up 4.7% from a year ago compared with a nationwide rise of 8.5%. Year to May growth was 5.6% versus 7.5%
nationwide. Compared with the three months to February spending was down 7.3% versus a 6.2% fall nationwide. The data
suggest below average strength in retail spending in the region in the past year and in recent months.
WEST COAST
• Spending Growth Near Average
All economic data for the West Coast region need to be treated carefully and smoothed over many months where possible
given the small numbers being dealt with. Taking that caveat into account we note the following. West Coast region BNZ
debit and credit card holders spent $2.1m on retail goods in May, $6.5m in the three months to May, and $25.9m in the
year to May. Annual spending was 0.5% of total NZ card expenditure. In the three months to May spending in the region
was up 7.0% from a year ago compared with a nationwide rise of 8.5%. Year to May growth was 7.7% versus 7.5% nationwide.
Compared with the three months to February spending was down 6.1% versus a 6.2% fall nationwide. The data suggest about
average strength in retail spending in the region in the past year and in recent months.
CANTERBURY
• Strongish Spending Growth
Canterbury region BNZ debit and credit card holders spent $59m on retail goods in May, $179m in the three months to May,
and $708m in the year to May. Annual spending was 14.5% of total NZ card expenditure. In the three months to May
spending in the region was up 9.4% from a year ago compared with a nationwide rise of 8.5%. Year to May growth was 8.2%
versus 7.5% nationwide. Compared with the three months to February spending was down 5.7% versus a 6.2% fall nationwide.
The data suggest above average strength in retail spending in the region in the past year and in recent months.
OTAGO
• Spending Growth Eases Slightly
Otago region BNZ debit and credit card holders spent $22m on retail goods in May, $67m in the three months to May, and
$262m in the year to May. Annual spending was 5.3% of total NZ card expenditure. In the three months to May spending in
the region was up 9.7% from a year ago compared with a nationwide rise of 8.5%. Year to May growth was 8.3% versus 7.5%
nationwide. Compared with the three months to February spending was down 6.7% versus a 6.2% fall nationwide. The data
suggest above average strength in retail spending in the region in the past year but some relative easing in recent
months.
SOUTHLAND
• Spending Weakness Giving Way To Out-Performance
Southland region BNZ debit and credit card holders spent $8.7m on retail goods in May, $27m in the three months to May,
and $104m in the year to May. Annual spending was 2.1% of total NZ card expenditure. In the three months to May spending
in the region was up 8.9% from a year ago compared with a nationwide rise of 8.5%. Year to May growth was 6.6% versus
7.5% nationwide. Compared with the three months to February spending was down 5.8% versus a 6.2% fall nationwide. The
data suggest below average strength in retail spending in the region in the past year and about average spending growth
in recent months.
In the following table we have chosen to rank regions by growth in the three months to May over the three months to
February as this gives the best general feel for relative performance recently. Note these data include some automotive
categories.
May qtr vs. Feb. quarter / May qtr vs. a year ago / May year on May year / May 2005 vs. May 2004
Waikato -4.4 / 10.5 / 9.2 / 11.4
Northland -4.6 / 9.0 / 8.8 / 10.9
Gisborne -4.7 / 9.2 / 6.3 / 8.7
Hawkes Bay -5.2 / 8.5 / 6.4 / 8.0
Canterbury -5.7 / 9.4 / 8.2 / 10.0
Southland -5.8 / 8.9 / 6.6 / 12.7
Bay of Plenty -5.9 / 8.9 / 8.1 / 10.5
West Coast -6.1 / 7.0 / 7.7 / 5.5
Auckland -6.2 / 7.8 / 6.4 / 7.9
New Zealand -6.2 / 8.5 / 7.5 / 9.0
Manawatu -6.3 / 7.7 / 6.9 / 7.2
Otago -6.7 / 9.7 / 8.3 / 10.7
Taranaki -6.9 / 7.4 / 7.2 / 7.3
Nelson Marl. -7.3 / 4.7 / 5.6 / 6.0
Wellington -7.7 / 8.9 / 8.5 / 8.9
CARD SPENDING BY STORETYPE
This section is directed to retailers who can separate out their receipts from cards versus cash, credit and cheques. We
adjust for changes in BNZ card user numbers to remove the effects of market share changes, and add back in population
growth. Exclusion of this latter change in months before February had imparted a small downward bias to reported growth
rates.
The way retailers can use the data we present below is as follows.
Large retailers with big market shares can focus on the monthly change columns showing first the change in card spending
from a month earlier then the change from a year ago. This will give insight into market share changes and the
effectiveness of campaigns which may have been run over the calendar month period.
Small retailers need to make allowance for the sometimes large fluctuations in their market share by looking at smoothed
data. Small retailers should compare the change in their card sales in the past three months with our own measure to
gauge relative performance. They can also compare the change in their card sales versus a year earlier with our own
measure to estimate annual change in market share.
We are presenting data on a calendar month and nationwide basis. Our database however is daily and can be broken down to
any desired physical grouping. Information on customised market share and customer demographic analysis is available to
BNZ business customers on a contractual basis. Please contact your BNZ business manager for further information.
May vs. Apr. % Change / May 05 vs. May 04 / 3 mths to May vs. 3 mths to Feb. % / 3 mths to May vs. year ago % / May Year
on May yr
Supermarket and grocery 4.0 / 7.0 / -5.8 / 6.1 / 4.0
Fresh meat, fruit etc 1.8 / 24.7 / -16.6 / 23.0 / 16.7
Liquor -6.9 / 8.9 / -19.5 / 9.3 / 5.7
Other food 6.6 / 16.8 / 3.6 / 13.5 / 10.2
Takeaway food -0.6 / 19.4 / 6.6 / 19.5 / 19.2
Department stores -4.6 / 4.5 / -17.0 / 5.2 / 4.6
Furniture and floor coverings 7.2 / 4.5 / -2.7 / 4.4 / 5.2
Hardware -1.8 / 15.8 / -11.2 / 11.7 / 11.0
Appliances 8.2 / 8.7 / -9.6 / 9.3 / 10.1
Recreational goods 0.3 / 14.1 / -17.9 / 11.8 / 5.4
Clothing and softgoods -8.5 / 6.2 / 7.6 / 2.8 / 3.6
Footwear -14.6 / 7.6 / 12.8 / 9.1 / 5.8
Chemist 7.6 / 9.3 / -4.3 / 3.2 / 4.0
Household equipment repair 11.9 / 24.4 / 9.6 / 27.3 / 23.5
Other retailing 2.9 / 8.6 / -17.0 / 9.1 / 9.8
Accommodation -15.2 / 6.7 / -6.3 / 8.1 / 6.2
Bars and clubs -1.5 / 10.5 / -1.5 / 12.3 / 11.6
Cafes and restaurants -3.6 / 11.0 / -3.4 / 11.7 / 10.5
Personal and household hiring -12.1 / 13.9 / 1.7 / 24.9 / 19.6
Other personal services 0.9 / 15.4 / -0.7 / 11.7 / 11.0
Auto Fuel 1.2 / 11.3 / 5.2 / 13.6 / 15.0
Elec. services, smash repair 2.9 / 12.1 / 5.2 / 7.5 / 6.0
Auto repair & services 5.5 / 16.7 / 2.2 / 12.3 / 13.2
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.