New Zealanders increase spending on debit, credit cards

Monday 22nd September 2008

New Zealanders increased spending on credit and debit cards for a second month in August, adding to signs that consumer confidence is reviving from its slump as interest rates fall.

The value of retail electronic card transactions rose 1.1% in August from July, according to Statistics New Zealand. That followed a 0.9% gain in the previous month.

Consumer confidence increased this month, according to the Roy Morgan poll, as the central bank cut interest rates more than expected and fuel prices fell. Consumers will probably be heartened more when tax cuts kick in starting October 1.

"Leading indicators suggest the period of rapid deterioration in retail spending has likely ended," said Shamubeel Eaqub, economist at Goldman Sachs JBWere. Still, "We do not anticipate a sharp recovery as likely labour and housing market weakness weigh on the outlook."

Excluding fuel, vehicle sales and related items, core ECT spending rose 1.7%.

Figures this week are expected to confirm the economy fell into recession in the first half and some economists predict it continued contracting in the third quarter. The Treasury expects a revival of growth in the fourth quarter.

By Jonathan Underhill

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