Brad Olsen: Infometrics Principal Economist on retail spending being 'stronger than expected' for December

Economists have revealed retail spending numbers were better than expected for the month of December.

The total value of electronic card spending, including in non-retail services and other non-retail categories, rose a seasonally adjusted 1.5 percent to $9.23 billion in December from November, according to Stats NZ. 

That brought total spending in line with levels last seen in November 2023.

Infometrics Principal Economist Brad Olsen says this is a sign green shoots are returning to the economy.

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Episode Transcript

Speaker 1 (00:00):
Now some good news for retailers today. Electronic card spending
was up in December compared to November. This is electronic
The total value of electronic card spending roses seasonally adjusted
one point five percent. I mean, spending is now back
to levels last seen in November twenty twenty three. And
of course Infmetrics principal economist Brad Olsen looks over this

(00:23):
stuff that he joins in our hell of Brad. Good
afternoon and a happy new year. Because this is the
first time we've spoken. You've looked at the data. What
does it say? Yeah, you're right.

Speaker 2 (00:33):
I mean, we have seen effectively a bit of a
stronger end to the year coming through when we look
at core retail sales, so stripping out some of the
volatility that we often see in the numbers, and on
a seasonally adjusted basis, that increased one point eight percent.
That was the that's I think five months now in
a row. We have seen it pick up from a
low point in July. So that's certainly helping that idea

(00:55):
that we are seeing those greener shoots coming through in
the economy. I think important still to recognized that compared
to a year ago, spending was still lower, and of
course we've had higher inflation over the last couple of years,
we've seen population growth and so you know, spending per
person and the amount of goods being taken out of
store still isn't great, but it's a continued sort of

(01:17):
shift in trend when it comes to spending, and that's
certainly giving us a bit more optimism as we head
into this year.

Speaker 1 (01:23):
That's good thinking that it shows that we are still
going into stores, but when we go into stores, we
spend less each.

Speaker 2 (01:30):
That's very much true. Yeah, but you're totally right there
that spending per transaction has come down, and we have
got some data from throughout twenty twenty four that suggests
that there's sort of two things going on there. One,
people are discount hunting a little bit more. They're definitely
looking for a bargain, and that's of course driving down
sort of per transaction spend. But it's also that people

(01:52):
aren't spending as much on some of those bigger, higher
value items, and in particular you look at the likes
of furniture and you know, electronics and similar, people are
instead spending on the smaller end of the spectrum because
that's what they can afford at the moment, so that's
dropped things back as well. It was interesting looking across
the type of spending two that the likes of there

(02:13):
has been a bit of an increase in that bigger
end of town, the durable items. But as well as
that sort of still some trends that are showing that
compared to where we were middle of last year, the
likes of hospitality spending has also increased to touch. So look,
we're not there. This is not sort of you know,
the economic champagne corks have popped, but again just that
sort of feeling that we're starting to head more in

(02:34):
the right direction.

Speaker 1 (02:35):
Well, it's still nine point two three billion dollars and
there are still money and cash flow as king. But
here's the thing we're talking about December. December was Christmas time,
So couldn't we have expected an even greater increase because
of Christmas?

Speaker 2 (02:48):
We do have the stats that have taken that into accounts.
So because we seasonally just do we take out the
fact that yet December is always big relative to normal.
Even then, it looks like there were parts of the
sort of Christmas period that were a bit better than normal.
We had Worldline reporting that suggested that spending at the
start of December was above what we saw in December

(03:10):
twenty twenty three. In that lead up to last into
the previous Christmas. That got a little bit more challenging
through the middle of the Christmas period, just because of
course everyone's sort of going in and had been spending.
There weren't quite as many deals on offer, and so
a few people look like they sort of saved a
bit of their cash, didn't spend it before Christmas came
out with a resurgence on Boxing Day, when we saw

(03:30):
a thirteen percent increase in spending on Boxing Day year
on yet because people were bargain hunting. So it looks
like through the month of December they have sort of
been a few hot on a few cold patches, but
on the whole, still not a bad result. And I
think you noted that look that effectively that was last month.
We're now twenty one days into January. We're not expecting
that we'll see big, big boosts each and every month,

(03:52):
but as more people start to refix onto those lower
mortgage rates, they'll have a bit more cash to spend.
They're not going to go and blow it immediately on expending,
but they'll do a little bit more here and there.

Speaker 1 (04:03):
Of course, inflation figures out tomorrow. We're talking to Paul
Bloxham about it, and just in about ten minutes time,
you want to just float us a number that you
might think.

Speaker 2 (04:11):
Our pick is two point zero percent. We're one of
the lowest, I think the lowest of the domestic forecasts.
So we're thinking that inflation comes in that little bit softer.
But I think almost more importantly, we're looking and thinking
about the signals that have already been coming through for
what's next. We've got that, of course lower dollar, so
in the sort of fear or the worry about important

(04:32):
inflation still front of mine for us.

Speaker 1 (04:33):
Very good stef and I thank you for your time,
Brad Olsen, and we're into the countryside next with JB. Mackay.
For more from Hither Duplessy Allen Drive.

Speaker 2 (04:42):
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