Retail spending on credit, debit cards stalls in June

New Zealand spending on electronic cards stalled in June as declines in apparel and durables outweighed increases in consumables and hospitality.

The value of core retail spending, which strips out fuel and vehicle related items, was unchanged at $3.91 billion in June from May, Statistics New Zealand said. On an annual basis, core retail spending rose 6.1 percent from June last year.

New Zealand's economy has started to slow, with business, consumer and farmer confidence declining as dairy prices, the nation's key commodity export, remain lower for longer, prompting the Reserve Bank to start reducing interest rates. Retailers were particularly downbeat in the latest business confidence survey published this week by the New Zealand Institute of Economic Research. The survey showed retailers had pared back expectations for sales in the second quarter, with a net 7 percent pessimistic about sales, a change from the net 21 percent who were positive in the previous quarter.

"The June spending data indicate household spending growth has passed its peak," ASB Bank rural economist Nathan Penny said in a note. "We expect it will slow further from here as confidence wanes, particularly in the dairy regions, but also on Greek and Chinese concerns. That said, spending is slowing from high to just average."

Penny said the data reaffirms ASB's expectation for another 75 basis points of cuts to the official cash rate this year, which would fully reverse the central bank's tightening in policy last year when it raised interest rates by a percentage point.

The data today showed spending on apparel in June dropped 1.1 percent from May, its fourth consecutive monthly decline, while durable spending slid 0.2 percent.

Meanwhile, consumables spending increased 0.5 percent while hospitality spending gained 0.3 percent.

Total retail spending, which includes automotive and fuel spending, rose 0.5 percent from May for an annual gain of 5 percent.

There were 117 million transactions across all industries in June, with an average value of $50. The total amount spent across all transactions was $5.9 billion.

(BusinessDesk)