Hospitality spending in December grew by 1% or $12m compared with November, while spending on consumables increased by $36m (1.4%).
The only category with a spending decline was motor vehicles (also likely seasonal), which fell by $2.4 million (1.3%) compared with November.
Services, including repair and maintenance, personal care, funeral and other personal services, reported spending growth of 2% ($7.4m).
Spending in the non-retail (excluding services) category also increased in December, up by 1% ($22m) compared with November.
That category included medical and other healthcare spending, travel and tour arrangements, postal and courier delivery, and other non-retail industries.
The total value of electronic card spending, including the two non-retail categories (services and other non-retail), was up by $139m (1.5%) compared with November.
In actual terms, cardholders made 183 million transactions across all industries in December 2024, with an average value of $58 per transaction.
The total amount spent using electronic cards was $11 billion.
December quarter
Looking at the wider December quarter, spending in the retail industries increased by $203m (1.1%), while in the core retail industries, it grew by $231m (1.3%) compared with the September 2024 quarter.
In good news for the hospitality sector, it reported the biggest growth over the holiday period, with spending increasing by 3.6% or $129m in the December quarter.
Durables and consumables also reported increases, up by 2.2% ($101m) and 0.5% ($40m) respectively.
Spending on apparel also grew in the December quarter, likely as part of holiday sales, up by 2.1% ($20m).
The only categories to report a decline in spending during the December quarter compared to September were motor vehicles and fuel, which fell by 1.4% ($7.7m) and 1.5% ($23m) respectively.
The non-retail (excluding services) category was down $23m (0.3%) compared with the previous quarter, and the services category was up $20m (1.8%).
The total value of electronic card spending in the December quarter, including the two non-retail categories (services and other non-retail), increased by $193m (0.7%) compared with the September 2024 quarter.
“Stronger than expected”
Westpac senior economist Satish Ranchhod said that December’s result was the largest monthly rise since early 2022 when Covid-related activity restrictions were eased.
“The solid December spending figures cap off what has been a tough year for many New Zealand retailers. Compared to this time last year, spending levels are still down about 1%,” Ranchhod said.
“While some of the strength in the December spending figures might prove to be temporary, it still points to a firming in households’ spending appetites. Taking a longer-term perspective, the more general trend in retail spending over the past few months is to the upside, with spending levels having risen for the past five months.”
ASB senior economists Yen Nguyen and Mark Smith said the result set the scene for a retail recovery in 2025, albeit not a swift one.
“Lower mortgage interest rates, coupled with further cooling of inflation and support from income tax cuts, seems to have encouraged household spending over the festive month,” Nguyen and Smith said.
“The conditions underlying drivers for card spending in 2025 still look to be mixed. Cost of living pressures are abating, and consumer sentiment is improving, with further OCR [Official Cash Rate] cuts expected to support consumer spending. However, rising unemployment headwinds will continue to face consumers.”
Retail NZ chief executive Carolyn Young said the Government’s new economic growth agenda can’t come soon enough.
“While retailers saw some benefit from the customary Christmas rush and the Boxing Day sales, consumers were being careful with their spending,” Young said.
“Profitability will continue to be a major challenge for retailers as we head into the new year. We are looking forward to seeing the benefits of the Government’s new focus on economic growth, to put more money in customers’ wallets.”
Tom Raynel is a multimedia business journalist for the Herald, covering small business and retail.
