Spending on electronic cards rebounded and was close to pre-Covid levels in September.
Last month spending volumes returned following a loosening in lockdown restrictions and levels were sitting just 2 per cent below levels recorded in February.
Spending on durables was strong and overall retail card spending rebounded by a record 24.6 per cent in Q3, but economists warn retail headwinds are "likely to intensify" as we head into summer.
The bank said the better-than-expected spending figures in September could partly be attributed to the housing market underpinning spending.
Retail electronic card spending rebounded 5.4 per cent month on month in September, or 7.3 per cent year-on-year. ASB said this lift was more modest than its 10 per cent expectation.
Core card spending also recorded a more moderate lift than expected, ASB said, up 5 per cent month-on-month or 9.1 per cent year-on-year.
By category, spending on apparel lifted 26.7 per cent month-on-month, durables 13.7 per cent and hospitality 12.8 per cent. Fuel spending increased 7.1 per cent in the month, while consumable spending dropped 5.1 per cent.
The September figures were broadly consistent with the weekly card spending data produced by MBIE, showing a broad-based jump across retail store-types towards the end of the month, coinciding with the shift down in alert levels for Auckland and the rest of New Zealand, ASB said.
Westpac senior economist Satish Ranchhod also said spending in September was "more modest" than the bank's forecast 9 per cent rise.
"Spending levels have been resilient in the face of the headwinds battering the economy. In fact, spending in core categories remains around the levels that we saw prior to the outbreak of Covid-19," Ranchhod said in a note.
"Looking into the details of recent spending trends, we're seeing particular strength in spending on durable items like household furnishings. That's likely to have been boosted by the strength of the housing market. Spending on household items has also been supported by the rise in working-from-home arrangements and the reduction in overseas holidays."
Despite increases in spending across a number of categories, spending on hospitality remains 10 per cent below the levels recorded in February prior to the outbreak, which could be attributed to continued social distancing requirements in Auckland throughout September, as well as ongoing restrictions on international tourist arrivals, Ranchhod said.
"Looking ahead, we expect spending levels will continue to rise through the final part of the year. In the near term, the easing of lockdown conditions has already seen people heading back to bars and restaurants. And as we go into the holiday shopping season, the combination of low interest rates and the related lift in the housing market signal a powerful boost to spending appetites."
Ranchhod said ongoing disruptions to global manufacturing and shipping, and the state of the labour market would likely dampen spending in the months ahead.