Electronic sales show retailing recovery

File photo / Dean Purcell

Spending charged to electronic cards last month points to continued recovery in the retail sector.

Retail transactions on credit, debit or charge cards rose 0.9 per cent, seasonally adjusted, on top of a 1 per cent rise in April.

Core retail sales, which exclude vehicles and fuel, rose 0.8 per cent, following a 0.7 per cent increase in April.

Statistics New Zealand estimates card transactions data capture about 65 per cent of core retail spending. Core retail spending charged to cards in the three months to May 31 was up 1.4 per cent on the preceding three months.

Fuel and apparel sales posted the largest monthly gains, 4.6 per cent and 3.9 per cent respectively, but both followed contraction in April. Sales of durable goods were up 1.1 per cent on top of a 1 per cent rise in April.

Deutsche Bank chief economist Darren Gibbs said that improving activity levels and prices in the housing market, such as the Real Estate Institute reported yesterday, helped to underpin consumer spending.

Infometrics economist Matt Nolan said that the lift in electronic card spending on durable goods, with rising house sales and a lift in vehicle sales, was positive for the retail industry.

But the recent sharp drop in export commodity prices would eventually translate into weaker income growth.

"With households already focused on only spending out of current income," Nolan said, "weaker commodity prices are likely to limit the extent of any recovery in retail spending."