Labour weekend spend shows retail still in the dumps

Photo / Herald On Sunday

New Zealanders spent more on their debit and credit cards this long weekend, than they did a year earlier, but growth remains subdued when the recent GST hike is taken into account.

Figures from Paymark, which processes more than 75 per cent of all electronic transactions in New Zealand, shows spending was up 1.9 per cent on 2009, or $5.7 million, but tracked below previous months when the number, rather than the value of transactions was taken into account.

Paymark head of sales and marketing Paul Whiston said the rate of increase during the long weekend was slightly less, "but not out of line", with the average 2.3 per cent spending growth rate in the 12 months before September.

"However, given that GST pushed most prices up, this effectively means below-average spending growth over the weekend."

The simplest way to show this growth was via the number rather than the value of card transactions - which was up 2.9 per cent on Labour weekend last year against average growth of 5.3 per cent in the 12 months prior to September, he said.

"In others words, Labour weekend is not a big weekend for spending and this year, with the great weather, it again proved a good time to get out of the city," he said.

Growth in the regions was strongest, with the Bay of Plenty (up 6.3 per cent), Wairarapa (up 7 per cent) and the Waikato (up 5.6 per cent) making big gains in retail spending.

In the cities spending in Auckland increased 2 per cent, fell 4.3 per cent in Wellington and remained flat in Canterbury (0 per cent).

Placemakers CEO John Beveridge said DIYers were out in force during the long weekend, taking advantage of the warmer weather and discounted offers.

"We were pleased with sales over Labour weekend. It would also be an exaggeration to say things are terrific but we feel like it has been a pretty reasonable October from a retail perspective."

People may have moved house, were opting to renovate, spelling good news for the trade sector, he said.

"People are saying right we will put another bathroom in, we'll put a deck on, we'll buy some outdoor furniture - we won't go to restaurants and we'll stay at home and watch videos."

However Beveridge was cautious about sounding too confident about where the retail space was headed in the months ahead.

"It's so unpredictable. No-one knows what is going to happen next. We are just making sure our offers are good and that we know what our customers want," he said.

ASB economist Jane Turner said the weak result was in keeping with the pattern seen in retail spending data in previous months.

Subdued consumer demand and low confidence reflected the weakness in wage growth and continued uncertainty in the labour market, she said.

"The Reserve Bank cited the ongoing consumer caution sector and weak credit demand as one reason for keeping the OCR on hold at 3 per cent today.

"We are expecting confidence and spending will gradually improve over the next year," she said.