Kiwis use debit cards more in May, but green shoots emerging in core retail spending

New Zealand shoppers are using their credit cards less, their debit cards more, and are spending less per electronic card transaction, figures from Statistics New Zealand (Stats NZ) show. However, there are tentative signs of a recovery in card spending with seasonally adjusted core retail spending growing 1.6% in May from April, the highest monthly gain in almost a year. The overall figures reinforce signs that consumers are beginning to spend more on core retail items, but overall spending is still subdued as the recession is expected to extend into late 2009. However, this apparent green shoot will be watched closely by the Reserve Bank as it considers when to start increasing the Official Cash Rate again. Long term interest rates have already started rising. The total amount of electronic card transactions in May rose to 91 million, the highest for any month, bar December months, since this experimental series began in 2001. Meanwhile, the average value per transaction fell to NZ$51 (from NZ$52 in April, and NZ$54 in May 2008), its lowest level since the series began (first chart). The proportion of transactions that were made with debit cards rose to 56.9% in May, from 54.4% in May 2008. This was the highest proportion of debit card usage since the series began. The proportion of transactions made with credit cards fell to 43.1% from 45.6% in May 2008. The unadjusted total value of all electronic card transactions in May fell very slightly from a year ago to NZ$4.678 billion (see second chart). Seasonally adjusted it rose slightly from May 2008 and was up 0.7% from April. Card spending in the core retail industries (which excludes the motor vehicle-related industries) saw a 3.1% rise (unadjusted) from May last year, and was up 1.6% (seasonally adjusted) from April. "This follows (seasonally adjusted) increases of 0.8% and 0.7% in March and April, respectively," Acting Government Statistician Dallas Welch said. "Led by consumables, all the core retail industry groups had increases in May," Welch said. "The trends for the three main series (total, retail, and core retail) are all showing growth since January 2009. Latest figures indicate that the growth rate is slightly stronger than previous estimates. However, initial trend estimates may be revised and should be used with caution until more data points are available," she said.