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NZ retail sales gain on pick-up in 'patchy' hospitality sector

Wednesday 14th August 2013

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New Zealand retail sales grew faster than economists were picking in the second three months of the year, led by a record gain in what's seen as a "patchy" hospitality sector.

Spending on food and beverage services industries, which consist of cafes, restaurants and bars, climbed a record 4.5 percent to $1.8 billion, seasonally adjusted, in the three months ended June 30, with the value of spending on hospitality up a seasonally adjusted 0.9 percent to $18.14 billion, according to Statistics New Zealand.

That underpinned a 1.7 percent total volume of retail sales rose 1.7 percent, seasonally adjusted, to $17.94 billion in quarter, from a 0.9 percent pace of growth in the first quarter, which was revised up from 0.5 percent. Actual retail sales volumes rose 4.2 percent in the June quarter from the same period a year earlier, and actual values were up 3.3 percent to $17.55 billion.

"It's been patchy in terms of where the spending is - it's not across the whole sector," said Bruce Robertson, chief executive of the Hospitality Association of New Zealand, which represents about 2,350 businesses nationwide. "It's encouraging to see a bit more spending coming back into hospo - New Zealanders have been pretty careful how they spend their money over the last few years."

Today's figures come after employment data last week showed full-time equivalent employees in accommodation and food services were up 0.6 percent to 70,300 from the June quarter in 2012, and average weekly paid hours for FTEs increased 0.4 percent to 35.56 hours.

HANZ's Robertson said uneven trading has made it difficult for businesses to organise their resourcing, with "people quiet on one day, then booming the next."

ASB economist Daniel Smith said strength in the hospitality and accommodation, which rose 3.4 percent in volume terms, followed strong tourist arrivals in the period.

The volume of core retail sales, which strip out vehicle-related spending, rose 2.3 percent to $13.95 billion in the quarter, and the value increased 2 percent to $13.87 billion.

Electronic cards data, which accounts for about two-thirds of retail sales, had already indicated household spending will likely make a bigger contribution to economic growth in the second quarter, while inflation figures showed retailers trimmed their level of discounting in the quarter, with 14 percent of stock sold at a lower price compared to 16 percent in the March period.

The volume of spending on fuel fell 5 percent to $1.59 billion for a 7.5 percent decline in the value to $1.86 billion, while the volume of purchases of vehicles and parts increased 3 percent to $2.41 billion, for a percent increase in value terms to $2.42 billion.

Spending on hardware, building and garden supplies rose 3.7 percent in volume terms to $1.33 billion and 4 percent in value terms to $1.35 billion, while furniture, floor coverings, houseware and textile spending advanced 5.4 percent in volume terms to $502 million and 3.2 percent to $494 million in value terms.

Bubbling property markets in Auckland and Christchurch, which are suffering from a limited supply of new housing, have been under the microscope as the Reserve Bank monitors the risk of rising household credit spilling over into consumer spending.

Today's figures show seasonally adjusted retail sales rose above $4,000 per head of population for the first time since September 2007, at $4,016 in the June quarter.

Retail stocks at the end of the quarter rose 0.5 percent to $6.35 billion from a year earlier, led by a 23 percent increase in non-store and commission-based retailing to $113 million, and an 8.5 percent lift in supermarket and grocery store stocks to $648 million.

Auckland was the biggest gainer across the regions with actual sales up 5.8 percent to $6.08 billion in the June quarter from a year earlier, followed by a 5.1 percent lift in Canterbury to $2.4 billion. On a seasonally adjusted basis, Canterbury retail sales rose 0.3 percent and Auckland gained 1.6 percent.

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