Nick Brunsdon: Infometrics Principal Economist on consumer spending continuing its rise in February

Consumer spending has increased in February, signalling a positive recovery within the retail sector. 

Worldline NZ’s payments network shows spending reached more than $3.6 billion, up 2.2% on February last year. 

The Auckland and Northland regions saw a lift of 2.8% year on year – the most growth the area has seen in a single month in nearly two years. 

Infometrics Principal Economist Nick Brunsdon told Mike Hosking consumer confidence is continuing to grow. 

He says December saw a 4.9% in retail trade, so it's all pointing in the same direction. 

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Episode Transcript

Speaker 1 (00:00):
They kep another solid week of economic data that confirms

(00:02):
we are are part of a solid turn around economically.
Our new retail data spending for fair Ab up two
point two percent, Auckland North and biggest lived in two years, Palmeston, North,
o Tigo, Wykato virtually running on rocket fuel at the moment.
Nick Brunston, Principal Economists and Informetrics, Nick, morning to you. Mike.
Tell you what I like the discretionary And it's not
just today's numbers, but the numbers we've seen in the

(00:23):
last couple of weeks. The discretionary aspect of it. In
other words, we're buying stuff we don't have to. That's
about confidence, isn't it. Yeah?

Speaker 2 (00:30):
Absolutely, And those are the areas of retails that have
been harder over the last couple of years. And we're
starting to see just about all parts of the retail
sector are seeing our recovery, including those discretionary areas.

Speaker 1 (00:41):
Is this a trend? Is this real?

Speaker 2 (00:44):
Yeah? It is, I think, and certainly that two point
two percent result nationally is to be expected, Stating said.
Retail Trade survey for the December quarter showed a four
point nine percent increase in retail trade, so it's all
kind of pointing in the same direction. The strength of
orphans is a bit surprising to me. Bearing a mind,
employment in Auckland's down zero point nine percent up to
the end of last year, so it's spending up two

(01:06):
point eight but clearly the people that are still employed
are spending.

Speaker 1 (01:09):
Are you in Auckland, I'm in Wellington, Okay, No, wonder
if you're in Auckland, you can feel it's real. I
wonder also how much of it is tourist related. There's
no hiding from the fact that this country is full
of tourists at the moment. Is that part of it?

Speaker 2 (01:25):
Yeah, yeah, we are seeing your further recovery and tourism.
It isn't at a massive rate because we're getting close
to where we work pre pandemic, so it's sort of
a more moderate tourism tourism growth, and certainly in an
area like Auckland, the number of locals outweighs and tourists
so much. So I would read that two point eight
percent as a much more of a read on the

(01:46):
confidence of residents in Auckland.

Speaker 1 (01:47):
What's your vibe on a word? Is it fragile? Is
it solidifying? What is it robust?

Speaker 2 (01:56):
I was solidifying? And what's the big asterisk being what's
going on in the Middle East. We know that's going
to flow through in terms of oil prices. We know
it's already starting to flow through in terms of shipping prices.
So that is a little bit of a threat to
the recovery that we're seeing.

Speaker 1 (02:09):
Is it psychological too? If I'm looking at this war
and freaking out about it, even though I don't know
how long it's going to go on? Is that material?
Do you think? And when will we see that? If
it is?

Speaker 2 (02:20):
I think that the petrol prices are a pretty key
kind of I guess guarding staff for people spending confidence,
and you know, potentially the increases an oil price that
we've seen already in the early stages of the conflict
could add up to sort of forty cents to petrol prices.
I think when people start seeing those prices go up
and that portion of their weekly spending money disappear on

(02:43):
the basics, that might knock people a little bit.

Speaker 1 (02:46):
When does the reserve bank get involved? How long does
it have to go and the economic thing becomes real
before the reserve bank starts to run a commentary that's
slightly different from what they were running.

Speaker 2 (02:57):
Both putting aside the Middle East for a moment, Eric
as it would start rising sort of mid to later
this year. The situation in the Middle East may help
a little bit in a sense that if households are
having to divert more their spending to fuel, that means
they just simply have less money to spend on everything else.
So that may reduce domestic inflationary pressures. At the same time,
when you've got your retailers having to pay thousands of

(03:20):
dollars more for every ship and container they bring in,
that could start to push up prices. It's not necessarily
domestic inflation, you know, those are things that were important,
but it might have the reserve bank of bitter concerns.

Speaker 1 (03:31):
Yeah, have a great week you Nick, appreciate it. Nick Brunston,
Principal economist at the app The Good People of Infometrics.
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