Accommodation, travel spending dips; food, liquor rise

Monday 6th April 2009

Spending on accommodation and travel fell in March, a month when New Zealanders typically book winter holidays, suggesting people are deferring plans in the face of the ongoing recession.

Travel spending fell 14% last month, while spending on accommodation declined 8%, based on electronic transaction processed by Paymark. Total Paymark transactions rose 1.5% from a year earlier, though March 2008 included Easter and adjusting for that, spending fell.

"What we have seen in the last month is that travel-related sales are down 14% which suggests New Zealanders are foregoing their holiday plans or travelling locally," said Simon Tong, Paymark chief executive.

Rising unemployment and less job security in a weakening economy have eroded consumers' willingness to spend. New Zealanders have turned pessimistic, with the Westpac McDermott Miller Consumer Confidence Index falling to 96 in the first quarter from 101.3 in the previous three month period. A reading below 100 means pessimists outnumber optimists.

New Zealand retail sales unexpected fell in January, led by fuel and automobiles, according to government figures this month, the latest available.

Warehouse Group, the biggest retailer on the NZX 50 Index, this month reported a 24% drop in first-half profit, largely reflecting costs to decommission its Extra hypermarket stores. Sales fell 2.9% to $923.5 million. Its shares have gained about 2% this year and were last at $3.59.

Paymark's figures for March showed spending on food and liquor continues to rise, gaining 9.9% from March 2008.

Almost $3.56 billion worth of electronic transactions were processed through Paymark's network during March, with more than 69 million payments.

Adjusting for Easter 2008, Taranaki/Taupo and South Canterbury had the biggest growth in transactions while Nelson, Bay of Plenty and West Coast regions remained the slowest.

Paymark processes more than three quarters of all in store electronic transactions in New Zealand.

By Jonathan Underhill

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