NZ consumers trim retail spending on credit, debit cards by 0.7% in October

Tuesday 10th November 2009

New Zealanders spent less on their credit and debit cards in October, the first decline in four months, suggesting a high jobless rate and a focus on reducing household debt are keeping a lid on spending.

Spending on electronic cards at retailers fell 0.2% in October, after gaining 0.7% in September, according to Statistics New Zealand. So-called core retail transactions, which exclude auto-related outlets, fell 0.4%.

The data suggests the economy is expanding at a subdued pace since emerging from recession in the second quarter. If consumer spending remains subdued, it may cast doubt on an early hike in interest rates by the Reserve Bank.

“For the moment, we continue to believe that it is quite unlikely that the RBNZ will tighten policy settings before the April 2010 meeting,” said Darren Gibbs, chief economist at Deutsche Bank. “If the recovery in consumer spending fails to gain significant traction over coming months, this would suggest that policy settings could remain at present levels for a little longer still.”

New Zealand’s unemployment rate rose to a 9-year high of 6.5% in the third quarter and some economists predict it will peak at 7%.

Spending on consumables such as food and liquor fell 0.7% last month, today’s report showed.

So-called durables rose 0.5%, hospitality gained 0.7% and services rose 0.8%. Apparel fell 0.3%.

Businesswire.co.nz

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