Spending on credit, debit cards rises in February

ASB economist Daniel Smith

New Zealanders spent more on their credit and debit cards in February, fuelled by spending on hospitality, while durables and apparel rebounded from declines in January.

The value of electronic card spending on retail rose 0.9 percent to a seasonally adjusted $4.58 billion in February, according to Statistics New Zealand. Core retailing, which excludes spending on fuel and auto-related items, gained 1.1 percent to $3.7 billion.

Spending on hospitality rose for a seventh month, up 1.5 percent to $719 million, while durables expenditure rose 1.3 percent to $1.1 billion, recovering from its January decline of 1.3 percent. Apparel spending rose 2.1 percent to $295 million, after dropping 2.7 percent the previous month. Consumables rose marginally, up 0.1 percent to $1.58 billion.

"February card spending showed continued growth," ASB economist Daniel Smith said in a note. "Durables spending was boosted by increased housing market activity over 2012 and 2013, with home buyers looking to furnish their new homes and higher house prices potentially inducing 'big-ticket' purchases through equity withdrawal or just higher confidence amongst households. Over recent months, however, growth in the durables category has slowed noticeably.

"Spending on durables may not grow as quickly as was the case last year, but strong consumer confidence is flowing through to hospitality spending," Smith said. "The environment for restaurants, cafes and bars looks very encouraging. High consumer confidence and strong population growth should continue to drive fairly strong spending growth."

The gain in total retail was in part buoyed by a jump in vehicle sales, up 2 percent to $131 million. Spending on fuel declined 1.8 percent to $744 million.

Expenditure on services rose 0.2 percent to $209 million, while non-retail industries slipped 0.1 percent to $1.28 billion.

On an unadjusted basis, total spending on electronic cards rose 5.8 percent to $5.72 billion from the same month a year earlier.

There were 108 million transactions on electronic cards in February, worth an average $53. About 54.1 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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