Inside Money: Boxing on in a non-traditional recovery

Boxing Day at Sylvia Park. Photo / Steven McNicholl

Cameron Brewer, chairman of Auckland Council's Business Advisory Panel, was not happy with the figures.

"This would have to be the first time in a long time Boxing Day sale numbers have gone backwards," Brewer said in a statement. "Boxing Day sales have been such a growth phenomenon in recent years. Maybe just maybe their best years are behind us."

Or maybe, just maybe, New Zealanders are responding rationally to current economic circumstances by not purchasing consumer items of diminishing marginal utility no matter how attractively priced.

We're buying less as Bill English told us to do to meet our "long term challenge", which is "building a sustainable recovery built on savings and exports rather than borrowing and consumption".

The exact nature of New Zealand's recovery - or lack of - remains the subject of debate but I like this diagnosis by Jason Wong, the recently-appointed head of investment strategy for AXA Global Investors NZ, published in the group's December Quarterly Update:

"New Zealand," Wong writes, "remains in the midst of a modest, non- traditional economic recovery. Household consumption and residential construction, the core drivers of traditional New Zealand recoveries, are still soft and are likely to remain so."

That explains the lack of traditional shopping action on Boxing Day, which is not, according to some news reports, a purely NZ phenomenon.

Consumers in the UK and Australia, for example, are reportedly 'fatigued' while the retailers are 'unhappy'.

Even in the US, where consumers are allegedly recovering, the post-Christmas shop-fest has disappointed.

And you can't blame the bitter northern hemisphere weather, according to this analysis on an investor chartist website.

Even if you discount the obvious error where the article cites a NZ Herald headline as proof that extreme winter weather hasn't hampered previous Boxing Day shopping, the story does appear to show people will buy in all sorts of weather if they're feeling good.

"In the end, the performance of retail sales does not seem to be driven by the drop or rise in outside temperatures," the article says. "Could it be that our shopping patterns, just like our investment decisions, rise and fall with the waves of social mood?"