Credit card sales weak as shoppers remain wary

Credit card spending inched up in October but "the plastic" is still a long way off fantastic, Reserve Bank figures show.

Total credit card billings rose a seasonally adjusted 0.1 percent in October to $5.18 billion but were still down 0.6 percent on the same month last year.

Westpac economist Doug Steel said consumer spending was still weak but showing signs of a comeback, and this was consistent with "quite a strong rebound in consumer confidence in the last six months".

"But it's nothing to write home about yet. There's still a lot of concern about rising unemployment and there's still a little bit of concern about the credit crisis ... but people are still telling us they are confident of better times ahead."

The Reserve Bank's indications that the official cash rate would remain at 2.5 percent until the second half of next year – pointing to another six months or so of relatively low interest rates – had given consumers extra assurance, he said.

Mr Steel expected spending in core retail sectors to increase by 3 to 5 percent year on year for the Christmas period, but said sales volumes would still be down compared with two or three years ago.

Retailers Association chief executive John Albertson said there had been a shift from spending on credit cards to eftpos cards in the past year as people started to live within their budgets. His "gut feeling" was the market was flat.

Camping equipment retailers said they expected a strong Christmas as New Zealanders opt for cheaper holidays outdoors.

Dwights retail operations manager Dave Dwight said its festive season was already off to a strong start and stores had been busy since September.

Meanwhile, figures from eftpos firm Paymark show the volume of credit card transactions in October increased by 0.3 percent year on year, while debit or eftpos transactions jumped by 6.3 percent.

The value of Paymark-processed transactions increased 0.5 percent to $3.54b in October, but dropped 0.5 percent year on year.

- © Fairfax NZ News