The latest card transaction data has been revealed, showing electronic card spending stalled in September as the government's tax policies are yet to benefit consumer spending. Photo / 123RF
The latest card transaction data has been revealed, showing electronic card spending stalled in September as the government's tax policies are yet to benefit consumer spending. Photo / 123RF
Retail spending was down for the September quarter despite transactions stalling their negative trend over the past two months, Stats NZ said today.
Electronic card spending in the retail industries remained unchanged on a monthly basis, with spending in core retail industries increasing by 0.3% or $19 million.
Spending withinhospitality and apparel grew the largest in September, up by 1% ($12m) and 1.1% ($3.6m) respectively.
Transactions for motor vehicles (excluding fuel) grew by 0.8% or $1.4m for the month.
Fuel recorded the largest decline for the month, down 3.1% or $16m.
Spending on consumables slightly increased, up by 0.2% or $4.1m, while spending on durables fell 0.5% or $7.8m.
The non-retail category (excluding services) increased by 1.4% since August, up by $31m. This category includes medical and other healthcare, travel and tour arrangement, postal and courier delivery, and other non-retail industries.
Spending in the services category, which includes maintenance, personal care, funerals and other personal services grew by 1.3% or $4.5m.
The total value of card transactions including the two non-core retail categories grew by 0.3% or $28m since August to $8.6 billion.
Retail NZ chief executive Carolyn Young said consumer confidence was key as spending stalled in retail industries for September.
Downward trend halting
Westpac senior economist Satish Ranchhod believed the downward trend in spending seen through the first half of the year had been arrested.
“I think a lot of households are still feeling that pressure from high inflation, and for many families still high interest rates.
“The drop off in fuel prices that we’ve seen over the past month is quite important because that would have freed up a lot of funds for discretionary spending.”
Looking at quarterly data, spending was down for retail industries by 0.7% or $135m compared to the June quarter, with spending in the core retail industries also down by 0.5% or $95m.
Retail NZ chief executive Carolyn Young said the numbers reflected the difficult sales environment retailers had been telling her about.
“Consumer confidence is key right now and retailers are hearing that consumers are worried about their job security and only purchasing the essentials.
“Until consumers see changes in their mortgages, loans or rent they will continue to keep their wallet firmly in their pocket.”
In August, retail card transactions grew for the first time in seven months - up 0.2% or $10 million - although economists said the effect of tax cuts and Government stimulus were yet to benefit Kiwi wallets.
After eight consecutive quarters of declining sales for the retail industry, last week’s decision to cut the official cash rate (OCR) by 50 basis points represented a notable turning point for industry leaders.
Many believed recent monetary policy changes would help lift consumer confidence heading into the festive season.
Briscoe Group chief executive Rod Duke said the decision was one of the first signs of good news as consumers with mortgages would have a bit more money in their pocket.
“I think it’ll mean, for all retailers, there’ll be just a bit more confidence in the suburbs.
“It’s really the first step. It always takes a little while, in my experience, for these things to drift through and be meaningful for people with housing interest loans and the like, but it is a mandatory first step.”
Business Canterbury chief executive Leeann Watson hoped it would provide a further boost to consumer confidence.
“This optimism indicates that recent drops in inflation and interest rates are positively influencing the business operating environment, even as many companies continue to navigate the challenges of what has felt like an elastic band economy over the past few years,” she said.
Tom Raynel is a multimedia business journalist for the Herald, covering small business and retail.
