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Spending remains modest but positive signs on the horizon

Tuesday 7 February 2012, 3:35PM

By Eleven \ PR

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Figures released today by Paymark showed the modest pickup in spending continued during January with Kiwis spending almost $3.8 billion via the Paymark network across the country. This equated to an extra $128 million or 3.5 per cent boost for retailers when compared to the same time last year.

Paymark Head of Sales and Marketing, Paul Whiston, says that while the 3.5 per cent year-on-year growth in spending was slightly lower than the average spending growth throughout 2011, it still stood up well.

“Kiwis cut back on spending in January and used the month to recover from Christmas splurges, as is normal, but the 3.5 per cent annual growth rate was above December’s 3.4 per cent year-on-year increase and November’s 3.2 per cent year-on-year increase”, says Whiston. “And that was with January this year including an extra Sunday and Monday – typically the two slowest days of the week,” he adds.

For the second month in a row Palmerston North enjoyed year-on-year spending growth well above the country’s average with spending up 8.7 per cent, equating to an additional $9.6 million spent in the region.

Retailers in Southland, South Canterbury and Auckland/Northland all enjoyed strong annual growth with spending up 8.1 per cent, 8.0 per cent and 5.5 per cent in the respective regions.

Canterbury was the only region to experience lower sales with spending down 1.9 per cent in comparison to January 2011. Spending was slow in Marlborough and Taranaki/Taupo with the regions only growing a modest 0.2 per cent year-on-year and 0.3 per cent year on year respectively.

Whiston adds that within the total spend there was a pickup in spending through merchants typically linked to the housing market.

“A promising trend we’re seeing through our network at the moment is the increase in spending linked to housing-related activity. Consistent with some other early signs of improvement in the housing market, spending amongst building-related merchants via Paymark was up 5.1 per cent in comparison to January 2011. The level of activity amongst this group is still relatively low but this annual growth rate betters any experienced last year.

“This could indicate that in spite of the patchy weather Kiwis have stepped up DIY around their homes or called in the experts – in particular plumbers, who enjoyed a 17.5 per cent year-on-year increase this January,” he concludes.

Other sectors that fared well during the month were footwear (+7 per cent year-on-year), auto repairs (+9.2 per cent year-on-year) and the travel sector (+4.6 per cent year-on-year).

In a continuing trend the volume of credit card transactions grew more than the volume of debit card transactions with 3.7 per cent growth and 1.2 per cent growth respectively.