Quake seen as factor in retail spending fall

Thursday 10th March 2011

The devastating February 22 Christchurch earthquake is seen as partly responsible for a fall in retail spending using electronic cards last month.

Figures from Statistics New Zealand today show retail sales using electronic cards edged lower by a seasonally adjusted 0.2% in February from January, held back from a steeper fall by a 2.5% rise in spending on fuel.

The core retail group, which excludes vehicle-related industries, fell 0.6% following a 2.3% rise in January. Spending using cards on durables fell a seasonally adjusted 2.4%, while spending on apparel dropped 4.9%.

Overall, total sales using electronic cards rose a seasonally adjusted 0.4%, with services up 1.3% and non-retail excluding services up 2%.

The actual value of core retail sales using electronic cards was up 5% in February from a year earlier.

ANZ said it expected the retail sales decline included a significant earthquake impact.

Earlier releases by Paymark had shown a February slump in the value of card transactions in the Christchurch area, with seasonally adjusted sales falling 7.1% in North Canterbury, with offsetting rises in nearby regional areas.

Earthquake disruptions were likely to be a prominent feature of the data, ANZ said.

It expected sales to remain weak in March, with the quake having been towards the end of February.

While the replacement of goods damaged in the earthquake would provide support to retail spending, it could be a number of months before households were in a position to do so, ANZ said.

ASB economist Christina Leung said it was likely the effects on spending would largely be seen in the data for March.

The rise in spending on consumables and fuel in the February figures was in line with recent increases in food and petrol prices, she said.

"Against the backdrop of rising living costs, households remain cautious and continue to restrain their spending on items such as furniture and clothing."

BNZ head of research Stephen Toplis said he was "staggered" that the retail spending was down just 0.2% on a month earlier, and up 6.1% for the year, despite electronic transactions having been "decimated" in Christchurch from February 22 onwards.

NZPA

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