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

 


UPDATE: NZ retail sales growth slows in first quarter

UPDATE: NZ retail sales growth slows in first quarter as interest rate hikes, slower housing market impact

(Recasts to show growth is sales is slowing, adds economist comment)

By Tina Morrison

May 14 (BusinessDesk) - New Zealand retail sales in the first quarter rose at half the pace of the fourth quarter as consumers held tighter to their wallets amid a slowdown in the housing market and as higher interest rates started to bite.

The volume of retail sales rose a seasonally adjusted 0.7 percent in the first three months of 2014, according to Statistics New Zealand, less than the 0.8 percent expected by economists in a Reuters survey and half the previous quarter’s 1.4 percent growth rate.

Retail sales growth is slowing after the Reserve Bank began a cycle of interest rate hikes in March and as the housing market slows in response to restrictions on bank lending to low equity borrowers. The Reserve Bank has more interest rate hikes in the pipeline after raising the benchmark in each of the past two months and expects the hikes will have a quicker impact because many borrowers are on floating rates or have fixed rates coming due soon.

“Consumer spending has lost some momentum compared to last year, perhaps in part a response to a slowing housing market,” Felix Delbruck, senior economist at Westpac Banking Corp. in New Zealand, said in a note. “Consumer spending will increasingly become a moderating force for economic growth as interest rates rise and the housing market slows. This may be happening just a bit sooner than we expected.”

Delbruck said the weaker retail data suggests “some mild downside risk” to Westpac’s first quarter gross domestic product forecast of 1.1 percent. First quarter GDP is scheduled for release on June 19.

The New Zealand dollar edged lower following the retail data, and was trading at 86.27 US cents at midday, from 86.41 cents immediately before the 10:45am release by Statistics New Zealand.

In the first quarter, actual sales were up 3.4 percent in value from the same quarter a year earlier, lagging the 3.7 percent estimate in the Reuters survey of economists.

Excluding fuel and vehicle-related spending, core retail sales in the first quarter rose a seasonally adjusted 0.8 percent from the previous quarter.

Sales in electrical and electronic goods led the quarterly increase in volumes, up 5.5 percent following a 3.7 percent gain in the fourth quarter. Hardware, building and garden supplies rose 2 percent in the first quarter while food and beverage sales increased 1.5 percent.

Meanwhile, sales in supermarket and grocery stores declined 0.7 percent and sales of furniture, floor coverings, houseware and textiles fell 2.4 percent.

Fuel retailing, which isn't seasonally adjusted, fell 0.6 percent in the latest quarter. Vehicle spending rose 0.6 percent.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Housing: Affordability Drops 14%, Driven By Auckland Prices

Housing affordability across New Zealand fell 14 percent in the year ending November 2014, with Auckland’s lack of affordability set to reach levels it hit during the height of the global financial crisis, according to the latest Massey University Home Affordability Report More>>

ALSO:

The Dry: Fonterra Drops Forecast Milk Volumes By 3.3 Percent

Fonterra Cooperative Group, the worlds largest dairy exporter, reduced its milk volume forecast for the 2014-2015 season by 3.3 per cent due to the impact of dry weather on production in recent weeks. More>>

ALSO:

Strike: Lyttelton Port Workers Vote To Escalate Dispute

Members of the Rail and Maritime Transport Union (RMTU) at Lyttelton Port today voted to escalate their industrial action. Around 200 RMTU members have been operating an overtime ban since 17 December and today they endorsed a series of full withdrawals of labour at the port. More>>

ALSO:

Scoop Business: NZ Dollar Falls To 3-Year Low As Investors Favour Greenback

The New Zealand dollar fell to its lowest in more than three years as investors sold euro and bought US dollars, weakening other currencies against the greenback. More>>

ALSO:

Scoop Business: NZ Govt Operating Deficit Smaller Than Expected

The New Zealand’s government’s operating deficit was smaller than expected in the first five months of the financial year as a clampdown on expenditure managed to offset a shortfall in the tax-take from last month’s forecast. More>>

ALSO:

0.8 Percent Annually:
NZ Inflation Falls Below RBNZ's Target

New Zealand's annual pace of inflation slowed to below the Reserve Bank's target band in the final three months of the year, giving governor Graeme Wheeler more room to keep the benchmark interest rate lower for longer.More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news