Debit, credit card purchases climb, stoking optimism for end of recession

Wednesday 9th September 2009

New Zealanders lifted purchases on credit and debit cards for a second month in August, stoking optimism that consumers are becoming more willing to spend amid signs the recession may be drawing to an end.

Spending on electronic cards rose 0.2% in August, after a 0.8% gain in July, according to Statistics New Zealand. Excluding auto-related transactions, spending edged up 0.1% at core retail industries.

The card data comes after a survey showed consumers have become the most upbeat about the economy in 18 months and after the Treasury department said New Zealand probably climbed out of recession this quarter.

The Treasury is forecasting the unemployment rate will peak at 7.5% next year, down from an earlier forecast. The New Zealand Roy Morgan Consumer Confidence Rating rose 2.2 points to 114.5, the highest since March 2008. Business confidence climbed to a four-year high in August.

“The broad theme of the data is one of retail spending stabilizing and starting to find a base, but not taking off,” said Philip Borkin, economist at ANZ National bank. “With unemployment still quite weak and deteriorating, and the natural deleveraging backdrop of consumers, we think retail spending will be relatively subdued going forward.”

Reserve Bank Governor Alan Bollard on August 31 said the global economy was at a turning point though the recovery was fragile. He is expected to keep the official cash rate unchanged at 2.5% when he announces his review of monetary policy tomorrow, and may drop the bank’s easing bias.

The New Zealand dollar traded at 69.70 US cents after the card data, from 69.65 cents immediately before the numbers were released. It earlier reached 69.84 cents, a 12 month high.

The NZSX Consumer Index gained 0.6% to 1460.64 today, the highest in more than a year. Briscoe Group climbing 3.5% to $1.19 after the retailer posted a 111% gain in earnings and doubling its first-half dividend.Warehouse Group, the biggest retailer on the NZX 50, gained 1% to $4.04.

Businesswire.co.nz

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