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Data Flash (New Zealand) Retail Sales - March

Data Flash (New Zealand) Retail Sales - March (first estimate)

Key facts

Retail sales are estimated to have risen by 0.2% mom in March. Sales were 5.9% higher than a year earlier.

Excluding auto sales, sales grew by 0.6% mom and 4.1% yoy.

Commentary

Starting with today's release, Statistics NZ plans to release an early estimate of monthly retail sales approximately three weeks after the reference month. The final estimate will be released, as usual, approximately five weeks after the reference month.

The data, which is only available on an aggregate basis, pointed to a seasonally adjusted 0.2% rise in retail sales in March.

Our expectation had been for a rise of around 0.6%-1.2%. However, Statistics New Zealand have cautioned that the early estimates will be subject to revision. Based on their analysis of data over the past year, the final estimate could differ from that published earlier by up to +/- 0.5 percentage points. Thus the early estimate should be taken as indicative, rather than definitive.

Nonetheless, taking the March outturn at face value, we estimate that total nominal retail sales grew by 1.7% in Q1.

We estimate that the retail trade deflator has increased by about 1% in Q1 (petrol prices, which increased 4.5% in Q1, have a higher weight in retail sales than in the CPI).

This implies that real retail sales increased by approximately 0.7% during the quarter. At present our forecast is for a 0.8% rise in private consumption in Q1.

The level of growth in Q1 is exaggerated slightly by the impact of the extra leap day in February (this was adjusted for in the monthly data but no adjustment is allowed for in the quarterly data). Nonetheless, this outturn is consistent with the high and increasing levels of consumer confidence recorded in recent surveys. Strong growth in household incomes, underpinned by higher returns in the agricultural sector in particular, is expected to contribute to solid growth in household consumption over coming quarters, notwithstanding recent and expected further rises in interest rates.

Darren Gibbs, Senior Economist (64) 9 351 1376

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