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Retail Sales Preview - Q1 2000

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Retail Sales Preview - Q1 2000

Key points

Contrary to previous advice from Statistics NZ, it now appears that Statistics NZ plan to make a leap year adjustment to the quarterly retail sales figures due for publication next Tuesday.

As a result, the reported seasonally adjusted movement will be much weaker than previously expected.

Importantly, the statistical treatment of the leap year effect has no impact on our view of underlying trends in the economy.

Provisional nominal data for the month of March was published on 20 April. Prior to adjustment for leap year effects, the data suggested that Statistics NZ would report growth in nominal sales of 1.7% s.a. in Q1.

Given our estimate of a 1% increase in the retail trade deflator, we concluded that Statistics NZ would report a 0.7% rise in real retail sales in Q1.

There is uncertainty about the size of the adjustment that will be made with Statistics NZ staff unwilling to discuss the methodology in detail in advance of the release.

An estimate of the probable adjustment can be derived by looking at the adjustment made to the published figures for retail sales in February.

We estimate that growth of around 3.8% would have been recorded in February had no leap year adjustment been made. Statistics NZ reported growth of 0.8%. Applying this result to the quarter as a whole suggests that seasonally adjusted sales could print up to 1% weaker than previously thought.

Given uncertainty about the size of the adjustment, we have lowered our forecasts of Q1 nominal and real retail sales growth by 0.7 percentage points.

As a result, we now estimate that Statistics NZ will publish an estimate of zero growth in real sales during Q1, although there is some risk of a slightly weaker outturn.

At this stage, Statistics NZ have made no decision about the treatment of leap year effects in the Q1 GDP data on 26 June. Therefore, at this stage our estimate of 0.6% growth qoq stands.

Darren Gibbs, Senior Economist

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