Retail spending on credit, debit cards rises in April; hospitality extends gain

Daniel Smith, ASB economist

New Zealand retail spending on credit and debit cards rose in April as gains in hospitality and consumables offset falling apparel purchases, as an accelerating economy continues to underpin household confidence.

The value of retail spending on electronic cards, seasonally adjusted, rose 0.3 percent to $4.59 billion in April, after growth stalled in March, according to Statistics New Zealand. Core retailing, which excludes spending on fuel and auto-related items, gained 0.1 percent to $3.71 billion. The value of total electronic card purchases, including services, fell for a second consecutive month down 0.4 percent to $6.02 billion with reduced spending on services and non-retail industries.

Spending on hospitality rose for a ninth month, up 0.3 percent to $723 million, and was up 11 percent from a year earlier. Spending on consumables, such as food and liquor, rose for a third month, up 0.7 percent to $1.6 billion. Apparel purchases fell 2.7 percent to a two-year low $277 million. Spending on durables, including furniture, hardware and appliances, fell 0.2 percent to $1.09 billion in April.

"A slight pick-up in growth in the large consumables category is encouraging, but weakness in apparel spending continued in April," ASB economist Daniel Smith said in a note. "Consumer confidence is soaring and employment conditions are looking very good. But consumers are still cautious about taking on debt, and low wage growth is restraining purchasing power."

Growing momentum in the local economy has underpinned improving consumer sentiment, which remained at elevated levels in last month's ANZ-Roy Morgan consumer confidence survey. That's supported a more upbeat retail sector, which has been faced with heightened competition from online offerings and subdued spending since the global financial crisis.

Today's figures show fuel spending rose 1.5 percent to $742 million, snapping three consecutive months of decline, while vehicle purchases dropped 3.5 percent to $129 million.

Non-retail services dropped 4.4 percent to $205 million and non-retail industries, excluding services, fell 2 percent to $1.23 billion.

On an unadjusted basis, total spending on electronic cards rose 4.6 percent to $5.83 billion from the same month a year earlier.

There were 113 million transactions in April, with the average spend about $51. About 56 percent of all transactions were on debit cards, with the remainder on credit. Electronic card transactions account for about two-thirds of all retail spending.

(BusinessDesk)

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