NZ spending on debit, credit cards rises in August, as retail sales advance

Thursday 10th September 2015

New Zealand spending on electronic cards rose in August for the fourth consecutive month, as spending across all retail sectors increased.

Spending in core retail rose a seasonally adjusted 0.9 percent to $4 billion in August, accelerating from July's 0.6 percent gain, Statistics New Zealand said. On an annual basis, core retail spending rose 5.7 percent from August last year.

The electronic cards data adds to a mixed picture for the New Zealand economy. Business, consumer and farmer confidence have declined as dairy prices, the nation's key commodity export, remain lower for longer, prompting the Reserve Bank to cut the official cash rate by 25 basis points to 2.75 percent today. However, a weaker kiwi dollar is aiding exporters, while the economy is getting a boost from construction activity in Canterbury and Auckland, and strong inbound migration and tourists.

"While high levels of migration and strong tourist demand continue to provide support, over the coming months we do expect to see some softening in spending growth,"Satish Ranchhod, senior economist at Westpac Bank said in a note. "Consumer confidence has fallen sharply, and a likely softening in economic growth will weigh on employment and earnings growth over the coming year. In addition, the decline in the NZD in recent months will push up prices for a range of imported goods, including durables and household furnishings."

A lift in spending was recorded across all retail sectors, with durables leading the gains up 1.5 percent from the previous month to $1.2 billion. Apparel rose 1.2 percent to $300 million, consumables increased 0.6 percent to $1.7 billion, and hospitality advanced 0.5 percent to $802 million.

Outside the core retail spending, which includes fuel and vehicles, rose 0.5 percent to $4.7 billion. Electronic card spending on fuel declined 2.5 percent to $607 million in August, while vehicles declined 1.3 percent to $150 million.

Total spending rose 0.1 percent to $6.3 million in the month, for an annual gain of 5 percent compared to the same month a year earlier.

There were 123 million transactions in August, up 4.5 percent from the same month the previous year. The average value of transactions was $50, with 55.8 percent putting purchases on their debit cards.

BusinessDesk.co.nz

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