Latest / Best of Business / Brad Olsen: Infometrics Principal Economist on retail spending being 'stronger than expected' for December

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Brad Olsen: Infometrics Principal Economist on retail spending being 'stronger than expected' for December · Best of Business

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  Speaker 1: You're listening to a podcast from News Talk sed be
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  Speaker 2: Now, some good news for retailers today. Electronic card spending
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  Speaker 2: was up in December compared to November. This is electronic
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  Speaker 2: The total value of electronic card spending rose a seasonally
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  Speaker 2: adjusted one point five percent. I mean, spending is now
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  Speaker 2: back to levels last seen in November twenty twenty three.
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  Speaker 2: And of course, Informetrics principal economist Brad Olsen looks over
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  Speaker 2: this stuff and he joins in our Hello, Brad, good
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  Speaker 2: afternoon and a happy new year. Because this is the
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  Speaker 2: first time we've spoken. You've looked at the data. What
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  Speaker 2: does it say?
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  Speaker 3: Yeah, you're right, I mean, we have seen effectively a
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  Speaker 3: bit of a stronger end to the year coming through
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  Speaker 3: when we look at core retail sales, so stripping out
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  Speaker 3: some of the volatility that we often see in the numbers,
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  Speaker 3: and on a seasonally adjusted basis, that increased one point
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  Speaker 3: eight percent. That was the that's I think five months
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  Speaker 3: now in a row. We have seen it pick up
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  Speaker 3: from a low point in July. So that's certainly helping
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  Speaker 3: that idea that we are seeing those greeners shoots coming
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  Speaker 3: through in the economy. I think important still to recognize
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  Speaker 3: that compared to a year ago, spending was still lower,
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  Speaker 3: and of course we've had higher inflation over the last
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  Speaker 3: couple of years, we've seen population growth, and so you know,
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  Speaker 3: spending per person and the amount of goods being taken
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  Speaker 3: out of store still isn't great, but it's a continued
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  Speaker 3: sort of shift in trend when it comes to spending,
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  Speaker 3: and that's certainly giving us a bit more optimism as
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  Speaker 3: we head into this year.
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  Speaker 2: That's good thinking that it shows that we are still
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  Speaker 2: going into stores, but when we go into stores, we
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  Speaker 2: spend less each.
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  Speaker 3: That's very much true. Yeah, but you're totally right there
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  Speaker 3: that spending per transaction has come down, and we have
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  Speaker 3: got some data from throughout twenty twenty four that suggests
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  Speaker 3: that there's sort of two things going on there. One,
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  Speaker 3: people are discount hunting a little bit more. They're definitely
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  Speaker 3: looking for a bargain, and that's of course driving down
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  Speaker 3: sort of per transaction spend. But it's all so that
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  Speaker 3: people aren't spending as much on some of those bigger,
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  Speaker 3: higher value items. And in particular, you look at the
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  Speaker 3: likes of furniture and you know, electronics and similar. People
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  Speaker 3: are instead spending on the smaller end of the spectrum
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  Speaker 3: because that's what they can afford at the moment. So
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  Speaker 3: that's dropped things back as well. It was interesting looking
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  Speaker 3: across the type of spending two that the likes of
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  Speaker 3: there has been a bit of an increase in that
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  Speaker 3: bigger end of town, the durable items. But as well
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  Speaker 3: as that sort of still some trends that are showing
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  Speaker 3: that compared to where we were middle of last year,
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  Speaker 3: the likes of hospitality spending has also increased to touch.
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  Speaker 3: So look, we're not there. This is not sort of
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  Speaker 3: you know, the economic champagne corks have popped, but again
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  Speaker 3: just that sort of feeling that we're starting to head
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  Speaker 3: more in the right direction.
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  Speaker 2: Well, it's still nine point two three billion dollars and
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  Speaker 2: that is still money and cash flow as king. But
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  Speaker 2: here's the thing we're talking about December. December was Christmas time,
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  Speaker 2: So couldn't we have expected an even greater increase because
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  Speaker 2: of Christmas?
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  Speaker 3: We do have the stats that have taken that into accounts.
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  Speaker 3: So because we season, just do we take out the
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  Speaker 3: fact that yet December's always big relative to normal. Even then,
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  Speaker 3: it looks like there were parts of the sort of
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  Speaker 3: Christmas period that were a bit better than normal. We
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  Speaker 3: had Worldline reporting that suggested that spending at the start
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  Speaker 3: of December was above what we saw in December twenty
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  Speaker 3: twenty three. In that lead up to last into the
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  Speaker 3: previous Christmas that got a little bit more challenging through
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  Speaker 3: the middle of the Christmas period, just because of course
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  Speaker 3: everyone's sort of going in and had been spending. There
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  Speaker 3: weren't quite as many deals on offer, and so a
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  Speaker 3: few people look like they sort of saved a bit
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  Speaker 3: of their cash, didn't spend it before Christmas came out
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  Speaker 3: with a resurgence on Boxing Day, when we saw a
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  Speaker 3: thirteen percent increase in spending on Boxing Day year on
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  Speaker 3: yet because people were bargain hunting. So it looks like
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  Speaker 3: through the month of December there have sort of been
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  Speaker 3: a few hot and a few cold patches, but on
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  Speaker 3: the whole, still not a bad result. And I think
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  Speaker 3: you know you noted that look that effectively that was
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  Speaker 3: last month. We're now twenty one days into January. We're
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  Speaker 3: not expecting that we'll see big, big boosts each and
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  Speaker 3: every month, but as more people start to refix onto
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  Speaker 3: those lower mortgage rates. They'll have a bit more cash
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  Speaker 3: to spend. They're not going to go and blow it
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  Speaker 3: immediately on big spending, but they'll do a little bit
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  Speaker 3: more here and there.
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  Speaker 2: Of course, inflation figures out tomorrow. We're talking to Paul
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  Speaker 2: Bloxham about it, and just in about ten minutes time,
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  Speaker 2: you want to just float us a number that you
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  Speaker 2: might think.
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  Speaker 3: Our pick is two point zero percent. We're one of
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  Speaker 3: the lowest, I think the lowest of the domestic forecast is.
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  Speaker 3: So we're thinking that inflation comes in that little bit softer.
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  Speaker 3: But I think almost more importantly, we're looking and thinking
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  Speaker 3: about the signals that have already been coming through for
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  Speaker 3: what's next. We've got that, of course, lower dollar, so
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  Speaker 3: in the sort of fear or the worry about important
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  Speaker 3: inflation still front of mine for us.
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  Speaker 2: Very good stuff, and I thank you for your time,
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  Speaker 2: Brad Olsen, and we're into the Countryside next with JB. Mackay.
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