Election cycle blues may hit retail sector

Election cycle blues may hit retail sector

Wednesday 6 September, 2017

The pre-election promises suggest retail spending growth ahead. However, the record of card spending through Paymark following recent general elections suggests the growth rate will more likely decline.

The underlying spending growth has declined in the last five elections between the year ending June immediately before the general election and in the year ending June that includes the election. A combination of events have contributed to this history, including broken political promises, private sector spending accelerating before the election and coinciding global shocks, so it is too simplistic to blame any deceleration on the new governments.

Nonetheless the warning is clear that expecting an economic surge based on election promises would be optimistic.

Meanwhile recent figures point to a continued moderate growth momentum in total but with mixed experiences amongst sectors and regions. The annual growth rate of underlying spending through Paymark for August was 6.8%, above the average of the first seven months of 2017. In seasonally adjusted terms, the increase between July 2017 and August 2017 was 1.1%.

Housing-related Paymark merchants (4.4% Aug-to-Aug) picked up from July but the generally slower nature of the housing cycle is showing as annual growth rates are now running well below the 9.6% average of 2016.

Also experiencing slower spending growth now are Accommodation merchants, the annual growth rate slipping to 4.2% in August, down from the heady 18% averaged last year.

Still experiencing strong growth include the Food and Liquor merchants (+8.6%) and the Food and Beverages Services merchants (+10.2%), the first group being the retailers and wholesalers of food and liquor and the second group being the cafes, restaurants, clubs and bars.

Motor vehicle and parts retailing (+10.5%) remains strong. The value of fuel spending is declining (-1.4%).

The across-sector annual underlying growth rate was highest in Wairarapa (12.9%), Hawke’s Bay (12.5%) and Marlborough (10.6%), while the lowest growth rates were in recorded by Canterbury (5.0%), Nelson (5.6%) and Auckland/Northland (5.7%).

ENDS

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