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

 

Retail Trade Sector Weakening


Retail Trade Sector Weakening

WHAT HAPPENED?

Statistics New Zealand released monthly data showing sales by various types of shops and an overall retail sales number. The data can be highly volatile on a monthly basis and at the regional level not reliable at all for just one month. The quarterly data are best. But with this caveat in mind we learned today that nominal seasonally adjusted retail spending was 7.9% higher in January than a year ago and 1.1% up from December. This is a strong result, however if one removes the often very volatile automotives sector sales actually gained only a minor 0.2% in January after being flat in December and were only 5.8% ahead of January 2002. Top performers in the month were footwear +5%, department stores +9.9%, and cars +4.6%. The weakest were appliances –5.8%, accommodation etc. –2.5%.

WHY DID THIS HAPPEN?

The weak ex-auto results for the past two months likely reflect

consumer confidence falling to below average levels,

reduced farmer spending due to falling incomes,

slower employment growth,

ending of a period of catch-up spending on durable goods like appliances, couches etc.

normal monthly volatility as SNZ estimate we can be 95% sure the actual result for January was 3% either side of their estimate showing a 1.1% gain. In other words the result could easily be a lot stronger or a lot weaker than the actual estimate.

WHO IS AFFECTED AND HOW?

Retailers because the data suggest the boom times from July to November when ex-auto sales grew on average 0.7% a month have well and truly ended. Stock levels may need addressing.

Borrowers because the data do finally suggest some slowing in the domestic economy – one of the factors cited by the Reserve Bank as necessary before they contemplate cutting the cash rate from 5.75%.

House builders because if people are cutting back on retail spending they will also eventually cut back on house building, but this will probably not be felt in the housing sector until late this year given the backlog of orders to fill.

WILL THIS CONTINUE?

We think there is good support for overall retail spending this year from

migration driven population growth,

below average interest rates,

rising house prices,

strong housing construction

a tight labour market.

We interpret the recent weak ex-auto results as reflecting a period of adjustment from unsustainably strong growth to something more normal. However, ex-auto retail spending will likely grow below the average 3.5% volume gain of the past ten years this year (last year was 5.2%) due to falling farm incomes and below average consumer confidence caused by worries about the world economy and geopolitical developments.

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

Mycoplasma Bovis: More Properties Positive

One of the latest infected properties is in the Hastings district, the other three are within a farming enterprise in Winton. The suspect property is near Ashburton. More>>

ALSO:

Manawatū Gorge Alternative: More Work Needed To Choose Route

“We are currently working closely and in partnership with local councils and other stakeholders to make the right long-term decision. It’s vital we have strong support on the new route as it will represent a very significant long-term investment and it will need to serve the region and the country for decades to come.” More>>

ALSO:

RBNZ: Super Fund Chief To Be New Reserve Bank Governor

Adrian Orr has been appointed as Reserve Bank Governor effective from 27 March 2018, Finance Minister Grant Robertson says. More>>

ALSO:

ScoopPro: Helping PR Professionals Get More Out Of Scoop

Scoop.co.nz has been a fixture of New Zealand’s news and Public Relations infrastructure for over 18 years. However, without the financial assistance of those using Scoop in a professional context in key sectors such as Public Relations and media, Scoop will not be able to continue this service... More>>

Insurance: 2017 Worst Year On Record For Weather-Related Losses

The Insurance Council of New Zealand (ICNZ) announced today that 2017 has been the most expensive year on record for weather-related losses, with a total insured-losses value of more than $242 million. More>>

ALSO: