Retail sales have record first-quarter drop

Friday 15th May 2009

New Zealand retail sales dropped by a record 2.9% in the first quarter, led by auto-related outlets and home appliances, underlining the reluctance of consumers to spend in a shrinking economy as job losses mount.

The seasonally adjusted decline is more than double the previous record 1.4% slide record in March 1997 and June 2008, according to Statistics New Zealand. The decline exceeded the 1.8% mean estimate in a Reuters survey and marked the sixth straight quarterly drop.

“From here we expect the retail sector to show signs of modest recovery through the balance of 2009,” said Bernard Doyle, strategist at Goldman Sachs JBWere. Still “the weakening employment outlook will ensure any recovery is relatively stilted.”

Figures this week showed spending on debt and credit cards at retailers rose 0.3% in April, the third monthly gain, stoking optimism consumers may be feeling less gloomy about their prospects. Transactions at core retail industries, which exclude motor vehicle-related outlets, rose 0.5%.

New Zealand’s economy may have entered its sixth quarter of recession last month, the worst downturn in 30 years, while the unemployment rate has climbed to a five-year high of 5%. That’s limiting the impact of stimulatory policy at the central bank, which cut the official cash rate to a record low 2.5% last month and said the OCR would remain low through until the second half of 2010.

The New Zealand dollar fell to 59.38 U.S. cents after the report from 59.56 cents immediately before.

For the sixth straight quarter, motor vehicle retailer was the biggest decliner, falling 11.4%.

Excluding vehicles, core retailing fell by a record 1.2% in the first three months of the year. Appliance sales fell 5.9%, department store sales dropped 3.6%, clothing and softgoods retailing slipped 3.1% and accommodation fell 3.9%. Supermarket and grocery sales rose 1.9%.

Businesswire.co.nz

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