January NZ Electronic Card Transactions

While it’s not one of the major monthly data releases, it has frequently moved the currency, and there are some special circumstances this time around. Here are some things to keep in mind ahead of the release.

Why This Data Matters

Electronic Card Transactions tracks the change in the total amount of purchases made by card, be it credit or debit.

This includes both domestic and foreign cards, which is significant given New Zealand’s reliance on tourism. The data is seasonally adjusted, also because of the impact of tourism.

About 60% of the Kiwi economy is measured with Electronic Card Transactions, so not only is it a good gauge of consumer sentiment, but it also gives us some insight into how the economy is doing as a whole.

Plus with the RBNZ interest rate decision and monetary policy statement expected the day after this release, the Electronic Card Transactions is the last bit of economic data we get before the important RBNZ event, making it worth examining.

What’s Been Going On

Despite the strong economic ties between Australia and New Zealand, the latter has mostly been escaping the economic concerns that have been haunting the land down under.

However, this makes investors extra on the alert to see if and when there is spillover. One of the early indicators of such a thing would be a drop in consumer confidence, which would manifest itself in a decrease in electronic card transactions.

The prior months’ release (covering December, a key month both for tourist arrivals as well as holiday spending) came in at a disappointing -2.3%, well below the 0.5% expected.

This was the worst performance since even before the sub-prime crisis. It was the second time in a row that this measure came in negative.

It’s not unusual for this data series to poke below zero, and then come back up again; it tends to be quite variable. Another factor to consider is that it is often revised with the release of the next month, so what might alleviate the situation is if December’s number is revised higher.

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