Econ Grapher

New Zealand Retail Sales Improve Thanks to Autos

New Zealand revealed stronger retail sales figures for the month of January. Headline retail sales rose 0.8% from December on a seasonally adjusted basis, beating consensus estimates for 0.5%, and better than a revised -0.4% in December. At NZ$5.54billion the result is up 3.6% year over year. Core retail sales (excluding vehicle related industries) was a little sluggish by comparison, up 0.3% month on month, and 1.6% year on year.


Drilling into the component industries, the top 3 performers were: Automotive fuel retailing 8%, Takeaway food retailing 9%, Motor vehicle retailing 10%. While the bottom 3 were: Personal and household goods hiring -14%, Liquor retailing -8%, and Fresh produce retailing -7%. As can be seen below, retail sales are dominated by the supermarkets category which tends to be relatively less cyclical due to purchases of necessities.


In terms of the absolute level of headline and core retail sales, the chart below shows the marked departure from the pre-recession trend, especially in the headline figures. Indeed this is reflective of the nature of the recovery that is underway in New Zealand; much improved, but subdued and sub-trend.


The outlook is for a continued pick up in retail sales as consumer confidence grows further and the unemployment rate starts to peak. Monetary policy and Fiscal policy conditions are also still relatively loose and stimulatory too, though the government has mentioned its intention to increase the goods and services sales tax. Yet the still weak figures did not give the RBNZ cause to lift the OCR from 2.50% on Thursday, but the numbers do support the general sentiment that a rate rise will come in June.

Sources
Statistics New Zealand www.stats.govt.nz Econ Grapher Analytics www.econgrapher.com

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