Auckland, Tuesday 2 August 2016
Underlying spending through Paymark was 5.5% higher in July than in July 2015. Once seasonal factors were taken into account, this amounted to a 0.7% growth rate from June 2016.
This marks an impressive continuation of spending growth through the first half of 2016, and of a momentum that dates back to first half 2009 (see Figure 1).
Spending is always less in the first half of the year relative to the previous second half but, once this seasonal effect is taken into account, spending was up 2.3% in the January-June six months this year. The half year growth rate has been above zero for 14 half years now, and above 2% for the last 7 half years.
At Paymark we take into account the migration of large customers to or from the Paymark network which would skew the data. This adjusted figure is reported as “underlying spending”.
17.7% increase in accommodation
14.8% increase in Food and Beverage services (i.e. cafes, bars etc)
11.9% increase in motor vehicle and parts retailing
11.5% increase in electrical and electronic goods retailing
However, while a spending increase has been a consistent theme in recent years, spending growth is by no means consistent week by week. This is shown in Figure 2 where a rolling seven days total underlying spend through Paymark is compared with the same seven days in 2015.
The changing fall of holidays has a significant effect on annual growth rates. Evident in the graph are big swings in annual growth rates due to changing dates for New Year’s Day, Easter, Queen’s Birthday and school holidays. These swings are even more noticeable on a regional basis as the timing of trips away vary from year to year. However, the annual rate of growth has consistently returned to the 7.3% annual average rate of the first half.
Of course, other factors will also affect spending. For example, it would appear that Lotto and inclement weather combined to dent spending growth in at times during July, with weather in particular likely to be behind the slippage in the last few days of July.
On a regional basis, spending growth between July 2015 and July 2016 was strongest in Bay of Plenty, Gisborne and Hawke’s Bay and weakest in West Coast, Palmerston North and Nelson. There were two key overall driving forces in the economy during the first half of 2016 - housing and tourism.
Figure 3 shows the regional record for two sectors that service these parts of the economy. Annual spending growth was 11.4% through combined merchants in the Home Decorating and Hardware, Floor Covering Retailing, Wholesale & Trade Hardware & Building Supplies, Plumbing Services, Furniture Stores and Appliance/Whiteware sectors. This growth was strongest in Otago and Bay of Plenty.
Annual spending growth was 14.8% amongst Food and Beverage service merchants (i.e. restaurants, cafes, bars etc). In part this high growth is due to continued pick up of contactless card payment but it is also reflective of strong tourism spending. Otago and Bay of Plenty were also amongst the regions with strongest growth within this sector as well. Conversely growth in both sectors was relatively low in Canterbury.
* Large clients moving to or from Paymark within last 12 months excluded from change calculation
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