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NZ retail sales rose in January, led by vehicles; core sales weaker than forecast

Friday 12th March 2010

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New Zealand retail sales rose more than expected in January, though the headline figure was driven by an increase in vehicle-related industries and core retail grew less than forecast.

Retail sales rose 0.8%, seasonally adjusted, in January, after declining 0.4% in December, according to Statistics New Zealand. Sales excluding autos rose 0.3% in the latest month, just a third of the 0.9% gain predicted in a Reuters survey. Total sales beat the 0.5% forecast.

The data adds to evidence of the tepid pace of recovery from last year’s recession, which was noted by Reserve Bank Governor Alan Bollard when he kept the official cash rate at a record low 2.5% yesterday. Warehouse Group, the biggest retailer on the NZX 50, today posted a 1.2% decline in first-half operating profit and said it didn’t expect any earnings growth in the full year.

“The recovery in consumer spending appears to be more gradual than we had been expecting,” said Christina Leung, economist at ASB. “Today's data adds to the recent slew of data which has removed the urgency for the RBNZ to commence its tightening cycle.”

ASB expects a 25 basis point increase in the OCR in June. The kiwi dollar recently traded at 69.84 US cents, down from 70.12 cents immediately before the retail report as released.

The official retail data plods a month behind the series that captures only spending on debit and credit cards, which were published for February earlier this week, showing the first decline in eight months. Spending at core retailers fell 0.2%, according to the card figures.

Today’s report showed sales rose in 12 out of the 24 store types monitored. Automotive fuel led gainers, rising 2.8% and motor vehicle retailing climbed 2%. Sales of recreational goods rose 4.8% and accommodation climbed 3%.

Sales at supermarkets and grocery stores, which make up more than 20% of total core sales, climbed 0.2%. Among declining store types, sales at hardware stores fell 2.8%, cafes and restaurants declined 0.8% and liquor retailing slipped 2.6%.

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