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

 

NZ Retail Sales

NZ Retail Sales

The headline value of New Zealand's retail sales rose 0.1% in September (JPMorgan -0.6%, consensus 0.4%), but the all-important ex-autos measure slipped 0.5% (consensus +0.4%), after a 0.8% rise in August. Annual growth in nominal retail sales in the year to September was just 0.5%oya, down from 1.5%oya in the year to August, and an annual gain of nearly 7% as recently as last November. In real terms over the September quarter, the volume of retail sales fell 0.9%q/q (consensus -1.2%), after a 1.4% drop in Q2. In fact, this is the third straight quarter of decline. It seems the value of retail sales has been inflated by price gains for imported products - owing to NZD weakness - as volumes plunge.

Over the month of September, sales dropped in 15 of the 25 retail sales categories. Sales of motor vehicles bounced 3.5%m/m, mainly on the back of rising prices for imported cars owing to the plunge in the NZD, while sales of fresh produce rose 4.2%. There also was a large rise in sales of liquor (up 3.0%) and in spending in bars and clubs (up 3.2%). On the flipside, however, sales of footwear plunged 5.9%, department store sales fell 3.9%, and clothing sales dived 4.7%. Each of these outcomes betrays weakness in the more discretionary areas of retail spending.

The softness in retail spending is further evidence that New Zealand's economy is in the midst of what is likely to be a prolonged recession. The economy already has contracted for two straight quarters - we expect another three quarters of falling GDP, and the implementation of additional fiscal and monetary support in coming months. Our concern is that retail sales were this weak well before the onset of the worst of the latest bout of global financial market instability and asset price corrections. Retail sales almost certainly will deteriorate significantly in the final months of 2008. Falling house prices and job losses as firms act to cut costs make the outlook for household spending in the first half of 2009 particularly bleak.

The RBNZ already has cut official interest rates aggressively, and we expect substantial monetary easing in coming quarters too. We forecast a 100bp rate cut in early December and a terminal cash rate of 3.25% later in 2009, exactly half the prevailing rate of 6.5%. Elevated market interest rates, however, and falling asset prices remain significant drags on household spending. The personal income tax cuts promised by the newly-elected National Government may provide something of a floor for household spending, but these will be undermined to a large extent by low confidence, mainly because of increased anxiety about job security.

Ends

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

Frog Recruitment: Kiwi Workers Reluctant To Make Business Trips Across The Ditch Despite Trans-Tasman Bubble Opening

When the trans-Tasman travel bubble opens today, many Kiwi companies won't be rushing to buy an air ticket, reluctant to cross the ditch to do business. The latest survey conducted by leading recruitment agency, Frog Recruitment of nearly 1,000 New Zealand ... More>>

Tourism: Employers Welcome Back Working Holidaymakers

Tourism businesses gearing up for the return of Australian visitors from next week will be relieved to learn that they will also have access to an offshore pool of much-needed job candidates, Tourism Industry Aotearoa says. Tourism employers around ... More>>

Commerce Commission: Latest Broadband Report Confirms Improved Performance Of Premium Fibre Plans

The latest report from the Commerce Commission’s Measuring Broadband New Zealand programme shows that the performance of Fibre Max plans has improved substantially. This follows a collaboration between the Commission, its independent testing partner, ... More>>

Air New Zealand: Capital Raise Deferred

Air New Zealand has decided to defer its planned capital raise to later in 2021 allowing more time to assess the impacts of recent developments on the airline’s path to recovery. 'We’ve seen some clearing of COVID-19 clouds recently, with ... More>>


Stats NZ: Prices For Transport And Housing Rise In March 2021 Quarter

Higher prices for transport and housing led to a 0.8 percent lift in the consumers price index in the March 2021 quarter, Stats NZ said today. Prices for getting around rose in the March quarter. Transport prices rose 3.9 percent, the biggest quarterly ... More>>

Stats NZ: New Report Shows Impact Of Demands On Land In New Zealand

A new environmental report released today by the Ministry for the Environment and Stats NZ, presents new data on New Zealand’s land cover, soil quality, and land fragmentation. The land cover data in the report, Our land 2021 , provides the most ... More>>

ALSO:

Stats NZ: March Card Spending Rebounds Despite COVID

There was a lift in retail card spending in March following a fall in the lockdown-disrupted February month, Stats NZ said today. Seasonally adjusted retail card spending rose by $53 million (0.9 percent), compared with February 2021. Visit our website to read ... More>>