Card spending up in July - core retail weak

Shoppers and sale bags at Sylvia Park Shopping Mall before Christmas. Photo / Janna Dixon

New Zealand retail spending on credit, debit and charge cards rose in July, though the gain was almost entirely driven by spending on fuel, while core retailing dropped for the first time in four months.

Total retail billings rose 0.4 per cent, seasonally adjusted, in July, while growth in spending for June was revised down to 1 per cent from 1.1 per cent, according to Statistics New Zealand. Excluding fuel, core retail transactions fell 0.7 per cent, mainly reflecting weaker apparel sales.

July data may not be enough in itself to signal a softening of retail activity, since it follows three strong months and individual components such as clothing can shift around on temporary factors like unexpectedly warm weather in winter.

The data accounts for about 65 per cent of New Zealand retail sales and is the main indicator of monthly consumer spending since the retail sales series was moved to a quarterly basis. Figures for the June quarter are due for release on Aug. 14 and are forecast to show a quarterly gain of 1.25 per cent, according to a Reuters survey, up from 0.5 per cent in the first quarter.

"It might be hinting that things are softening but with the monthly data you'd want to see a few more months to be sure," said Robin Clements, economist at UBS New Zealand. Apparel tends to be particularly volatile because of variables like shifting weather patterns.

Apparel sales dropped 3.3 per cent in July, following a 2.2 per cent gain in June and a 0.6 per cent decline in May. Consumables such as food and liquor rose 0.1 per cent while durables, which include hardware, furniture and appliances, fell 1.4 per cent.

Hospitality edged up 0.1 per cent, after four months of growth of more than 1 per cent.

Fuel sales rose 5.3 per cent in July, following gains of 4.3 per cent and 4.4 per cent respectively in June and May, reflecting rising prices. Vehicle related spending excluding fuel fell 0.3 per cent in July after three months of above 1 per cent growth.

Total card spending rose 0.2 per cent in the month and was up 8 per cent from the same month last year. Core retailing rose 4.5 per cent from a year ago and total retail rose 7.7 per cent, driven by a 24 per cent surge in fuel and a 13 per cent gain for vehicles.

In unadjusted terms, there were 111 million transactions across all industry types in July with an average value of $52 and a total spend of $5.8 billion.