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Retail card spending has started the year on a strong footing as core spending recovered from its December dip.
Statistics New Zealand figures, released yesterday, reported card spending increased in January as consumers spent more on eating out, hardware, furniture and appliances.
ASB senior economist Mark Smith said retail spending growth during the past three months had strengthened to an annualised 10% pace. Core spending was running at about a 5% annualised pace.
``Despite recent global equity market ructions, our expectation is for solid consumer spending growth over 2018 following more Government support and an improved outlook for household incomes.''
Stats NZ said seasonally adjusted total retail spending on credit and debit cards increased 1.4% in January from December, the biggest monthly gain since January 2017 when card spending lifted 2.3%. Spending rose across four of the six retail industries. Hospitality spending increased 1.5% as people spent more in bars, cafes, restaurants and takeaway shops. Durables spending rose 1.2%, fuel spending increased 1.5% and spending on consumables edged up 0.3%.
Bucking the trend, apparel spending slipped 0.1% and spending on vehicles, excluding fuel, dipped 0.6%.
Mr Smith said the stabilisation in the housing market and robust levels of consumer sentiment likely underpinned the higher durable spending. Hospitality spending was bolstered by warm summer conditions.
Yesterday's figures showed actual total retail spending climbed 3.4% to $5.3 billion in January from the same month a year earlier. Card-holders across all industries made 141 million transactions in the month, down from 161 million in December but ahead of the 133 million transactions recorded in January last year. The average value of $50 was unchanged from January last year, but down from $53 in December.
Historically high population growth, the record terms of trade, the tight labour market and prospect of firming wages should keep tills ringing, Mr Smith said.
Recent equity market volatility, high household debt levels and a low saving buffer were a reminder of the need for restraint.