Retail spending on debit, credit cards slows in October

New Zealand retail spending on electronic cards expanded at the slowest pace in four months in October, as an increase in consumable sales was eroded by weakness in durables, hospitality and apparel.

Spending on core retail, which strips out fuel and vehicle purchases, increased a seasonally adjusted 0.2 percent in October from September, Statistics New Zealand said. That's the slowest pace since June, when spending advanced 0.1 percent. On an annual basis, core retail spending rose 7.6 percent, the agency said.

New Zealand economic growth is weakening amid softer demand for its commodity products from key markets such as China, and as activity slows in the rebuilding of earthquake damaged Christchurch. Still, record migration and tourism numbers and low interest rates continue to underpin activity.

"While high levels of migration and strong tourist demand continue to provide support, over the coming months we expect to see some softening in spending growth," Westpac Banking Corp senior economist Satish Ranchhod said in a note. "Employment growth has already slowed. In addition, the economy will face significant headwinds over the coming year from softness in global trade, drought, and the levelling off of the Canterbury rebuild."

Spending on consumable goods rose 0.9% to $1.73 billion in October from September, the biggest gain since January. Meanwhile, spending on durables slipped for the first time since April, down 0.5% to $1.18 billion, and spending on hospitality stalled at $815 million. Apparel spending dropped 0.7% to $296 million, the biggest decline since June.

Total retail sales, which include fuel and vehicle sales, were unchanged at $4.78 billion, and up 5.6% on the year earlier month. Total sales, which include services and non-retail industries were little changed at $6.37 billion, for an annual gain of 5.2%.

There were 130 million transactions on electronic cards in October, up 5.9% from a year earlier. The average value of transactions was $50, with 55% put on to debit cards, and the remainder going on to credit. Electronic cards make up 67.8% of core retail sales, and 61.7% of total sales processed in New Zealand.

(BusinessDesk)