Electronic card transactions extend gains for fifth month

Friday 9th July 2010

New Zealand spending on debit and credit cards at retailers rose for a fifth month in June as looming tax cuts and the GST hike gave consumers more incentive to open their wallets in the second quarter.

The value of transactions in retail industries rose a seasonally adjusted 0.4% last month, matching May’s growth, according to Statistics New Zealand, with core transactions, which excludes motor vehicle-related buying, climbed 0.6% from a 1% gain a month earlier. All core industry groups recorded increases in June, led by food, liquor and chemist retail sales.

The card data comes after consumer confidence surveys showed people were more upbeat about their own financial position in the three months ended June 30, and may spur them into buying mode after the recession encouraged people to lay off new purchases and pay down debt. Still, this week’s NZIER quarterly survey of opinion raised the knockers once more, with business confidence stalling over the same period.

“We expect retail spending will pick up over the coming months as households bring forward purchases of big-ticket items ahead of the GST increase on 1st October,” said Christina Leung, economist at ASB Bank. “Recent business surveys point to growing optimism of rising sales amongst retailers.”

People are still using their own money to fund purchases, with credit card transactions staying at 44% of all transactions, the lowest proportion since the series began. Credit card billings rose 5% in May from the same month a year earlier, according to Reserve Bank data.

Total electronic card transactions climbed 0.7%, led by spending on services such as travel, health and wholesale items, and food, liquor and chemist retail goods.

The NZSE Consumer Index, which includes all retailers listed on the NZX, edged down 0.1% to 1568.38, and is down 0.7% this year.

The retail trade survey for May is released on July 14. Spending on electronic cards accounts for about 61% of all retail spending, and excludes cash and cheque purchases and hire purchase arrangements.

Businesswire.co.nz

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