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Electronic Card Spending Rises Modestly

Contributor:
Fuseworks Media
Fuseworks Media

Wellington, Jan 15 NZPA - Increased spending on petrol and diesel continued to be the main factor as the amount spent using electronic cards rose modestly last month.

Figures from Statistics New Zealand (SNZ) put spending on retail items using electronic cards up a seasonally adjusted 0.7 percent in December.

As had been the case since July, vehicle fuel was the main factor in the latest rise, SNZ said.

Electronic card core retail sales, which exclude the vehicle-related industries, rose 0.4 percent from November, driven by consumables such as food, liquor and chemist retailing, SNZ said.

The actual value of transactions in core retail was $4.2 billion, up 3.6 percent from December 2008.

Goldman Sachs JBWere analyst Bernard Doyle said he suspected the role of fuel in the figures was largely related to price.

While the amount of electronic card spending on durable items posted a small monthly gain, it still remained slightly down on levels of a year ago, Mr Doyle said.

Today's numbers were "hardly a strong rate of growth", but they did provide further evidence of a stabilisation and improvement in consumer spending trends.

He expected continued improvement in consumer spending in the first half of 2010, although headwinds remained in the form of subdued household income growth and a general de-leveraging backdrop.

Support should come from pent-up demand, particularly for durables, along with net migration gains and the ongoing benefit of an easing effective mortgage rate, Mr Doyle said.

"How sustainable these improvements will be once monetary and fiscal policy support begins to be removed remains an open question."

Deutsche Bank chief executive Darren Gibbs said the last couple of monthly electronic card reports indicated a little more life was returning to the retail sector.

"Still, at this stage growth could not be described as being strong and this seems likely to remain the case until economic growth broadens and employment and stronger wage growth resume, which should occur gradually over the course of this year," Mr Gibbs said.

The total value of electronic card transactions, including non-retail industries, rose by a seasonally adjusted 0.3 percent in December.

The non-retail industries, which include services such as travel and health, and wholesaling, were down 1.4 percent last month, SNZ said.

Trends for the value of transactions in the total, retail, and core retail series had all been increasing since January 2009.

Latest figures indicated that the growth rate for the retail series has picked up since last August. For the core retail series, the trend had been comparatively flat in recent months, up 1 percent since June.

Credit card use accounted for 44.6 percent of total transactions in the December quarter, an increase on the two previous quarters. That followed a general decline since the March 2008 quarter when the proportion was 47.7 percent.

NZPA

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