Pre-Election Spending Cycle Apparent for 2014
Pre-Election Spending Cycle Apparent for 2014 – But it’s
a Mixed Bag
Auckland, June 15 2014; Election years have been known for their faster economic growth and this year spending through the Paymark network hints that the election cycle is in swing again. However the experience is mixed across regions and sectors.
Nationwide spending through the Paymark network between June years 2013 and 2014 – the last full financial year before the September election – was up 7.3 per cent. This contrasts with growth rates experienced in 2012/2013 and 2011/2012, which both sat at 3.6 per cent.
Over the last three years, total spending through the Paymark network has increased 15.2 per cent. Unsurprisingly, Canterbury has been at the fore of growth over the last three years, particularly in the last two years during which spending increased by 17.6 per cent. However this rate of growth was matched by Auckland (17.6 per cent) and surpassed by Palmerston North (20.0 per cent), illustrating the wider nature of the recovery.
That said, spending in regions such as Wellington, Wanganui, and West Coast has struggled to increase in three years by as much as experienced in one year in the above regions.
“It is pleasing to see faster growth in the last 12 months, both for us and our customers,” says Mark Spicer, head of customer relations at Paymark. “But the reality is that growth per merchant has been modest on average in the last three years and for some businesses, it has been below expectation.“
The average spending increase per merchant during the three years was 10.4 per cent. Sectors with above-average per-merchant spending growth included hardware stores (+37.4 per cent) and cafes/restaurants (+21.7 per cent), both experiencing a strong increase in the number of transactions, and the automotive sector (+16.3 per cent) where higher petrol prices contributed. Spending per merchant increased much less amongst clothing retailers (+7.7 per cent), chemists (+3.4 per cent) and fruit produce retailers (+1.1 per cent).
In the most recent month, the growth rate has slowed but a late start to winter is thought to be a key factor. Spending increased 5.9 per cent year-on-year.
Annual growth for the month remained strong amongst food and liquor stores (+9.7 per cent) and across the hospitality sector (+9.9 per cent). But there was a noticeable decline in spending (June versus June) amongst department stores (-4.0 per cent), appliance retailers (- 6.5 per cent), clothing shops (-5.3 per cent) and footwear outlets (-1.1 per cent).
“It would be prudent to not read too much into the slow growth rate for last month” warns Mark Spicer, “as the mild start to winter has meant a delay for winter goods purchases. Weather often has a marked effect on the volume of payments through our network so as it gets colder, we’d expect to see an increase in spending at those outlets that provide appliances and services that keep us warm and dry.”
The annual growth rate was highest in Southland (+8.5
per cent) and Otago (+6.8 per cent) and lowest in South
Canterbury (+0.9 per cent), Nelson (+1.1 per cent), Taranaki
(+1.9 per cent) and West Coast (+2.0 per cent).
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