Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Retail Spending Prospects


Retail Spending Prospects

Next Thursday we will get full retail data for the December quarter, but what we have so far reveals that retailers had a fairly good time during 2002. In the September quarter the volume of retail sales excluding the usually volatile automotives sector was up 5.7% from a year earlier with year to September volumes up 4.6%, some 1% above the average growth rate. In the month of November nominal sales were 6.5% up from a year earlier after being 9.4% higher in October and 7.4% higher in September. The anecdotal evidence we have come across suggests sales in December were quite good – though not spectacular.

For the record, using the September year data we see that the big winners were the following storetypes.

Furniture & floor coverings +12%

Clothing & softgoods +7.7%

Recreation goods +7.2%

Footwear +7.2%

Appliances +6.9%

The weak areas were

Department stores +2.6%

Food retailers +3.0%

Cafes, restaurants & takeaways +3.0%

Why the strength in retail spending last year?

Below average interest rates from mid-2001.

Accelerated jobs growth of 2.7% in the September quarter on a year ago from 2.2% the previous year.

Catch-up spending by farmers in response to record incomes.

A surge in dwelling construction.

Strong population growth courtesy of net migration flows.

Strong growth in foreign student numbers.

Above average consumer confidence.

Rising wealth from house prices on average 8.5% higher in the September quarter than a year earlier.

Will 2003 be as strong as 2002? We don’t think so.

Farm incomes are falling and farmer pessimism is high, so we expect to see reduced farmer retail spending – but more of the absence of the catch-up period of spending than an actual fall in spending to way below average levels.

It looks like there will be a Middle East war this year. The uncertainty generated is likely to dent consumer confidence.

Jobs growth is likely to be less than in 2003 due to reduced business confidence and the effect on export revenue of the higher exchange rate.

On the other hand…

We expect continued rises in house prices this year which will underpin willingness to spend and the ability to borrow more to spend as well.

We expect the tight labour market to continue, giving people a strong feeling of high job security, again underpinning willingness to spend.

Dwelling consents data suggest there will be many new houses and apartments which will need furnishings.

Migration data suggest another period of strong population growth this year.

Newspaper reports suggest another firm rise in foreign student numbers this year.

There is a chance the Reserve Bank will cut interest rates this year, and if they increase them it may not be until very late in the year.

The rising exchange rate will tend to underpin consumer confidence and while consumers might normally take advantage of this by travelling overseas, geopolitical uncertainties suggest this might not happen in the near future.

Balancing these factors we do not get a bad picture regarding the extent of the pullback in retail spending growth this year. On average over the past decade ex-auto retail spending volumes have risen 3.6% per annum. For calendar 2003 we are picking an average to slightly below average year with the risk being that as long as the coming war does not go completely pear-shaped sales could be slightly stronger than we think. And that is undoubtedly one reason why the Reserve Bank is not rushing to cut the official cash rate yet in spite of the stronger currency.

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

I Sing The Highway Electric: Charge Net NZ To Connect New Zealand

BMW is turning Middle Earth electric after today announcing a substantial contribution to the charging network Charge Net NZ. This landmark partnership will enable Kiwis to drive their electric vehicles (EVs) right across New Zealand through the installation of a fast charging highway stretching from Kaitaia to Invercargill. More>>

ALSO:

Watch This Space: Mahia Rocket Lab Launch Site Officially Opened

Economic Development Minster Steven Joyce today opened New Zealand’s first orbital launch site, Rocket Lab Launch Complex 1, on the Mahia Peninsula on the North Island’s east coast. More>>

Earlier:

Marketing Rocks!
Ig Nobel Award Winners Assess The Personality Of Rocks

A Massey University marketing lecturer has received the 2016 Ig Nobel Prize for economics for a research project that asked university students to describe the “brand personalities” of three rocks. More>>

ALSO:

Nurofen Promotion: Reckitt Benckiser To Plead Guilty To Misleading Ads

Reckitt Benckiser (New Zealand) intends to plead guilty to charges of misleading consumers over the way it promoted a range of Nurofen products, the Commerce Commission says. More>>

ALSO:

Half A Billion Accounts, Including Xtra: Yahoo Confirms Huge Data Breach

The account information may have included names, email addresses, telephone numbers, dates of birth, hashed passwords (the vast majority with bcrypt) and, in some cases, encrypted or unencrypted security questions and answers. More>>

ALSO:

Rural Branches: Westpac To Close 19 Branches, ANZ Looks At 7

Westpac confirms it will close nineteen branches across the country; ANZ closes its Ngaruawahia branch and is consulting on plans to close six more branches; The bank workers union says many of its members are nervous about their futures and asking ... More>>

Interest Rates: RBNZ's Wheeler Keeps OCR At 2%

Reserve Bank governor Graeme Wheeler kept the official cash rate at 2 percent and said more easing will be needed to get inflation back within the target band. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news