New Zealand retail spending on credit and debit cards rose in
April, as gains in hospitality and consumables offset falling
apparel purchases, which reflected warmer than normal April
Forsyth Barr broker Suzanne Kinnaird said an accelerating
economy continued to underpin household confidence.
However, apparel, a key sector for the New Zealand-listed
retailers, had been one of the weakest segments in the retail
sector over the past two years, she said.
The warmer April weather was unfavourable for winter fashion
sales. The nationwide average temperature was 14.5degC in
April, about 1degC above the recorded 1971-2000 average, she
Hospitality continued its strong run in April, up 11% on the
previous corresponding period.
The sector had outperformed core retail for the past 15
Consumables were up 6% in April, outperforming core retail
for the first time in 12 months.
''The New Zealand consumer economy continues to show gradual
positive momentum, although most retailers are still cautious
on the outlook.''
Consumer confidence was also showing positive signs, Ms
Westpac senior economist Michael Gordon said a standard
seasonal adjustment programme could cope with the shifting
timing of Easter. While Anzac Day was not explicitly
accounted for, it was a regular part of the April landscape.
''What's harder to compensate for is the potential
interaction between the two holidays when they fall in the
same week, as they did this year.
Some people effectively treated this as a week-long break,
which may have temporarily depressed the level of activity.
''So there's a risk we see a string of soft activity numbers
for April, but we'll need to withhold judgement until we see
the May figures.''
However, the soft card spending figures for April were hardly
against the recent run of play, he said.
The monthly pace of household spending had clearly flattened
since the start of this year - not coincidentally, at the
same time the pace of house price inflation had cooled, Mr
Statistics New Zealand figures showed the value of retail
spending on electronic cards, seasonally adjusted, rose 0.3%
to $4.59 billion in April. Spending on hospitality rose for a
ninth month, up 0.3% to $723 million, and up 11% from a year
Spending on consumables, such as food and liquor, rose for a
third month, up 0.7% to $1.6 billion. Apparel purchases fell
2.7% to a two-year low $277 million. Spending on durables,
including furniture, hardware and appliances, fell 0.2% to
$1.09 billion in April.
The figures showed fuel spending rose 1.5% to $742 million,
snapping three consecutive months of decline, while vehicle
purchases dropped 3.5% to $129 million.
Ms Kinnaird said her preferred picks in the retail sector
were Michael Hill International and Restaurant Brands, with
an outperform rating.
Forsyth Barr also had an outperform rating on Pumpkin Patch
and Hallenstein Glasson, but both companies had a high risk
rating to reflect the near-term risks involved.