PRESS RELEASE: Paymark
Underlying spending through Paymark dropped by 0.5% between June and July 2017, in seasonally adjusted terms. The growth between July 2016 and July 2017 was a modest 3.6%.
There were contributing factors to the slowdown such as lower fuel prices and trading day effects.
But the trading pattern of the month also highlighted two other key influences. Growth slowed noticeably – spending declined on some days – around those periods when the weather was stormy, as we would expect. Also, there was noticeably slower growth in the last three weeks of July in the regions of Auckland/Northland, Wellington and Canterbury, especially amongst Accommodation merchants.
For the month in total, Auckland/Northland was amongst the slowest growing regions with an annual underlying spending growth of 2.6%, the other three regions being Nelson (2.5%), Taranaki (2.4%) and Canterbury (1.6%). The fastest growing region, in terms of spending through Paymark, was West Coast.
The slower growth in spending amongst Accommodation merchants came after the Lions tour. The annual Accommodation sector growth rate was 15.4% in June and dropped to ‘only’ 8.2% in July, the lowest Accommodation sector growth rate since March 2014. A similar deceleration occurred amongst the bars, clubs and cafes, their annual growth rate declining from 11.6% in June to 6.4% in July, the lowest growth since February 2013.
Of some consolation to this sector, there was the news during July that the next America’s Cup will be sailed in Auckland. The Cup provided a large boost to spending when last hosted in Auckland in 2002-2003, the extra spending estimated to have been around $500 million, including around $90 million extra through the combined Hospitality sector, including merchants such as hotels, camping grounds, bars, clubs, cafes etc. At the time this showed as strong spending growth through Paymark hospitality merchants, the annual growth rate for the six months ending March 2003 being 15.9%, around 4% higher than in the following couple of years.
Both the Lions tour and the America’s Cup are undoubted boosts to the local economies.The extra spending is partially revealed in Paymark figures, however there are effects that the Paymark figures cannot pick up.
First, both events show that a large proportion of payments occured beyond the retail sector – ticket sales for the rugby and boat building for the yachting – and hence are not captured within the Paymark network.
Second, the Paymark figures do not reveal the extent to which these events may have boosted tourism spending more generally, by way of tourists who might have otherwise visited during the events changing their plans to visit during other times or by way of extra tourists attracted to New Zealand due to general media reporting of the events.
What the Paymark figures do show is the extent that card spending on days near the event were above (or below) normal in the retail sectors and locations likely to be affected by the event. Both the Lions tour and the America’s Cup experience showed that the extra spending can be significant. However, to keep these events in perspective, the Lions tour also showed that the extra spending was localised and that there was a lull in activity immediately after the tour.