Thursday 13th January 2011
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Weak figures for sales made using credit and debit cards in the run up to Christmas are being seen as an indication that retailers face more tough times, even if 2011 turns out to be better than last year.
Statistics New Zealand (SNZ) today said seasonally adjusted electronic card transactions fell 1.2% in December from November.
For just retail industries, the fall was a seasonally adjusted 0.9%, while core retail, which excludes vehicle-related industries, declined 1.6%.
All industries recorded falls, except for a 3.3% rise in fuel retailing which economists attributed to a 5% increase in fuel prices.
Electronic card transactions of durable items - including furniture, hardware and appliances - were down a seasonally adjusted 1.2%, while for consumables - such as food and liquor - the fall was 0.6%, SNZ said.
The decline follows increases of at least 1% in the total value of electronic card transactions for each of the preceding three months.
The actual value of transactions in the core retail series was 3.9% higher than in December 2009.
Goldman Sachs economist Philip Borkin said the figures confirmed that the Christmas period had not been joyous for retailers.
After adjusting for the higher rate of GST introduced on October 1, annual growth for total retail spending on electronic cards rose just 1.6%, and annual core spending was up just 0.9%.
For core spending, that rate was in line with the low point reached in the middle of 2008, Borkin said.
He continued to expect that while the labour market backdrop was modestly improving and disposable income growth was solid with the help of personal tax cuts, ongoing deleveraging given weak house prices would keep a lid on spending.
Higher prices of food and petrol were also likely to contain discretionary consumption, Borkin said.
"For retailers, 2011 looks like it will be another challenging year."
ANZ economist Mark Smith said that on the back of the post-GST slump in retail sales in October and weakness in subsequent retail indicators, core retail volumes almost certainly contracted in the December quarter.
The data illustrated that the consumer was no longer the key source of growth in the New Zealand economy, he said.
"We still expect a modest strengthening in consumer spending over the latter half of 2011. This is more likely to be income-led (courtesy of higher rural and labour incomes) rather than borrowing-led as in the past upswing.
"It may not be flash, but it will have a more sustainable feel to it."
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