 Modest Recovery in Consumer Spending
(New Zealand) - January 2010
Electronic card transactions for December revealed a modest recovery in consumer spending, but it was an unspectacular Christmas for retailers depending on the yuletide season to boost sales. Statistics New Zealand figures for December 2009 show that core retail spending and debit and credit cards was flat throughout the month, with a rise of just 1 per cent since June last year.
“These figures confirm a steady but cautious return to spending growth. But, people weren’t too wild over Christmas,” says ASB economist Nick Tuffley.
In contrast to pre-recession times, people were spending more within their means. Growth in domestic credit, measured by the Reserve Bank, showed that fewer consumers were using credit cards to splash out at Christmas. “People resorted to just spending the money that they actually had,” says Tuffley.
Nevertheless, credit card use accounted for 44.6 per cent of all electronic transactions in December – an increase on the previous two quarters and end of the general decline seen since the March quarter of 2008, when the recession began to bite.
Total electronic card transactions increased 0.7 per cent in value between November and December, but that largely reflected increased fuel prices. With automotive purchases stripped out of the equation, month-on-month core retail growth was 0.4 per cent.
This year, many Kiwis also resorted to finding new homes for unwanted gifts on Trade Me. More than 10,000 listings were added to the website in the days following Christmas, with around half estimated to be people cashing in items such as mobile phone accessories, women’s clothing, cosmetics, jewellery, CDs, DVDs and kitchen appliances.
“In the week leading up to Christmas, we asked people if the idea of reselling or passing on a gift to someone else was acceptable and 65 per cent agreed that it was okay,” says Paul Ford from Trade Me.
Looking forward, the National Bank Business Outlook, which analyses where the economy will be going over the next 12 months, showed that business confidence softened further in December 2009, but the overall level remains robust across all major segments. And, the general spirit of the monthly survey was one of improvement.
In the year ahead:
- 37 per cent expect better times for their businesses – an improvement underpinned by improved perceptions across services, manufacturing and agriculture.
- 16 per cent of expect higher profits – the highest reading since early-2002.
- 6 per cent expect to hire new staff – a marginal movement, but an upward trend nevertheless.
- 10 per cent expect to invest more – up 3 percent from last month and the highest reading since late-2007
- 26 per cent expect to be exporting more – indicating that export intentions remain resilient in the face of the NZ dollar.
- 18 per cent expect to push up prices – still low, but the trend has been rising for three months.
The National Bank believes the scene is set for a respectable upswing across the economy in 2010. But, uncertainty remains as to how much of the improvement emanates from base effects or the feel-good factor of simply emerging from a recession.
Picture: www.dreamstime.com
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