*PRESS RELEASE 05 April 2011 For immediate release

Discretionary Spend Dips for Second Consecutive Month

Figures released today by Paymark show that while the value of transactions through its network increased 4.2 per cent year-on-year during March, Kiwis’ discretionary spending on goods has dropped to below-year-ago levels for the second month running.

The discretionary goods category (i.e. retail outlets excluding food, alcohol, and petrol stations) had been growing at a modest rate of 0.9 per cent (average) per annum since 2008, but dropped to 0.4 per cent below year-ago levels in both February and March.

Paymark Head of Sales and Marketing, Paul Whiston, says that the figures don’t come as a big surprise considering the spending decline in Christchurch, but the magnitude of the drop suggests wider impacts such as the housing downturn, higher food and petrol prices and an ongoing trend towards saving, not spending.

“People are paying down debt rather than spending the money they have left over after all the necessities are paid for. With the ‘must-haves’ like food and petrol getting pricier and pricier, people are having to make difficult choices,” he says.

Annual growth in the food and liquor categories has risen 10.1 per cent, and accommodation and restaurant spending is also up 2.3 per cent year-on-year.

Sectors feeling the pinch include furniture and floor covering outlets (-5.9 per cent), recreational good retailers (-4.8) and clothing retailers (-0.2 per cent).

Regions experiencing faster growth in March included Taranaki (8.9 per cent), Nelson (6.9 per cent) Palmerston North (7.6 per cent), Southland (6.8 per cent) and Wellington (5.8 per cent).

Six weeks on from the Christchurch earthquake, spending in Canterbury is continuing to recover: in the week of the major earthquake, sales for the region as a whole had dropped - 31 per cent below year-ago levels; by the week ending March 27th the decline had narrowed to - 3 per cent.

“The Christchurch earthquake, as to be expected, has had a major impact on Paymark spending figures. Even though higher spending was evident in South Canterbury and other parts of the South Island, the net impact is that national annual growth rates were probably around one per cent lower than otherwise might have been expected in February and March. While this paints the national totals in a brighter light, it does not change the fact that spending in many sectors remains constrained,” adds Whiston.

Another continuing trend can be seen in the debit vs. credit statistics, which show that during March, debit card usage continued to grow at +6.5 per cent, and credit card usage continued to decline (-2.5 per cent).

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