Credit, debit card spending falls to 15-month low

Wednesday 11th February 2009

New Zealanders' spending on credit and debit cards fell to a 15-month low in January as a rising jobless rate and prolonged recession deterred consumers from opening their wallets.

The value of electronic card transactions with retailers fell 0.6% last month to the lowest since October 2007, seasonally adjusted, according to Statistics New Zealand. Spending on fuel fell as prices dropped and excluding fuel and auto-related items, core retail spending fell 0.2%.

"Core retail spending on electronic cards has flat-lined in recent months," said Shamubeel Eaqub, economist at Goldman Sachs JBWere. "The annual growth rate of 2% is below the rate of price inflation and suggests volumes are contracting and the outlook for retailing is yet to show any evidence of life," he said.

The card spending data gives an early snapshot of retail sales, with official figures for December out later this week. The economy has entered its fifth quarter of contraction, according to the Treasury, and retailers including Wellington department store Kirkcaldie & Stains are predicting a slump in profits and a tough outlook.

New Zealand's unemployment rate rose to a five-year high of 4.6% in the fourth quarter and some economists are predicting it will exceed 7% this year, further denting consumer sentiment.

By Jonathan Underhill

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