KEY POINTS:
Consumers were increasingly inclined to leave their cards in their wallets last month, figures out yesterday show.
The value of electronic card transactions in the retail sector fell 0.4 per cent compared with May, when adjusted for seasonal effects, according to Statistics New Zealand data.
For "core" retail transactions, which exclude the automotive sector (mainly fuel sales), the monthly decline was 1.2 per cent and sales were just 1 per cent up on June last year.
"That's a very weak reading in the context of population growth and price increases," said Goldman Sachs JB Were economist Shamubeel Eaqub.
Bank of New Zealand economist Craig Ebert said: "While this might be picking up on the heavy price discounting that seems to be prevalent across the economy right now, we believe the falling electronic card transactions data more surely indicate that [retail sales] volumes are contracting at an increasing rate."
The electronic card transactions data capture spending on credit and debit cards which represents around 58 per cent of all retail spending.
For the June quarter, core electronic spending was down 0.6 per cent in nominal terms, even though consumer prices rose 1.6 per cent.
Deutsche Bank chief economist Darren Gibbs said the figures were consistent with a broad-based decline in retail sales contributing to what is shaping up as a second successive quarterly contraction in economic output in the June quarter - a common definition of recession.
Separate Reserve Bank data on credit card transactions reported billings in June were down 0.7 per cent on May, seasonally adjusted.
Eaqub does not expect to see a sustained recovery in consumer spending and the broader economy until the second half of next year.
Because of the prevalence of fixed-rate mortgages and continuing dislocation in world credit markets, the Reserve Bank's expected OCR cuts might do little to reflate the economy in the near term, Eaqub said.
ON ICE
* Electronic card transactions for June in the retail sector were down 0.4 per cent.
* Core electronic spending for the June quarter was down 0.6 per cent.
