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Retail Sales Trend Flattens

Retail Trade Survey - May 1999

Statistics New Zealand's retail trade figures for May 1999 show that after a period of steady growth in the second half of 1998, the trend in sales has flattened. Once seasonal influences are removed sales decreased 2.1 per cent during May, with most sectors recording falls. This is the second consecutive month total sales have fallen.

The timing of Easter this year obscured signs of this slow down, as sales in March and April were affected by some pre-Easter spending occurring in March.

The underlying trend for motor vehicle retailing and hardware has been declining since mid to late 1998. Recently trends in several other large storetypes have also begun to decline. The underlying trend in department store sales has been decreasing since early 1999, following almost two-and-a-half years of growth.

Last May legislative changes allowed retailers to parallel import a range of goods previously subject to sales restrictions, including appliances, cosmetics, clothes, footwear and cars. It is possible this change has led to a fall in prices for these commodities, which will have resulted in lower revenue figures if not offset by an increased volume of sales. At the same time, the tariffs on car imports were abolished. This resulted in the closure of local car assembly plants, and significant growth in the number of vehicles being imported. The axing of tariffs also contributed to a fall in motor vehicle prices.

Growth in the remaining storetypes have either slowed or flattened. The trend in the single largest storetype, food retailing, remains positive. However, the increase remains small. This growth is largely attributable to price changes as seen in the Food Price Index.

The May results are consistent with recent consumer and business confidence surveys. These indicators suggest that while confidence remains positive it has fallen from the levels recorded earlier in the year. However, the extent of the easing remains unclear with some indicators supporting a more positive outlook. For example: the number of short-term international visitor arrivals in May 1999 exceeded the previous seasonal high recorded in 1997; the underlying trend for the value of consents issued for construction of both residential and non-residential building work is showing tentative signs of growth; and spending charged on credit cards in New Zealand is up compared to May last year.

Ian Ewing

DEPUTY GOVERNMENT STATISTICIAN

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