Recession but consumption coming off high base
Newmarket Business Association
Friday, 26 September 2008
Recession but consumption coming off a very high base
With a lot of focus on today’s official confirmation of an economic recession, it’s important to keep any commentary around falling consumption in perspective, says a key Auckland business association.
“We hearing that it’s as bad as it was 10 years ago following the Asian financial crisis but lets not forget that consumers are consuming a lot more than a decade ago. When it comes to retail it’s important to remember we’re coming off a very high base. For retail across the country the last 10 years was an unprecedented period of growth,” says Cameron Brewer, head of the Newmarket Business Association.
“Let’s not forget that in early 2003 New Zealand retail sales were worth $4 billion per month. Today monthly retail sales are worth nearly $5.5 billion. That’s close to 25% retail spending growth in five years alone. Sure inflation accounts for some of it but nonetheless we’ve still seen some serious growth.
“Statistics New Zealand’s latest retail report released just two weeks ago made it very clear that total retail sales continuously rose between June 1998 and the end of 2007, with an average annual rise of six percent during that time. Since then officials describe the trend as “flat”. However lets not forget that since December 2007, core retail sales trends, which excludes the four vehicle-related industries, has actually been increasing on a monthly average, albeit slightly.
“Sure Statistics New Zealand’s official March and June quarterly figures were down. However it’s the fall in the likes of big ticket motor vehicle sales and high volume supermarket sales that are dragging down the overall result. In fact the latest figures released showed that in July clothing and softgoods retailing was up 9 percent and department stores up 5.9 percent on the previous month.”
“I’m certainly not saying that retailers aren’t hurting, many are. However lets remember that compared to five or 10 years ago the volume of retail sales are still up well up,” said Mr Brewer.