Retail sales unexpectedly fall

Monday 14th September 2009

New Zealand retail sales unexpectedly fell in July, led by sale at department stores, suggesting a recovery in consumer spending will be restrained by rising unemployment and households’ efforts to curb credit.

Retail sales fell 0.5% in July from June, seasonally adjusted, according to Statistics New Zealand. A gain of 0.5% was forecast, according to a Reuters survey. Excluding autos, core retail sales also declined 0.5%.

The retail sales data lags behind other data in providing a clue to consumer spending. Figures from Paymark, which processes more than 75% of the nation’s electronic transactions, showed New Zealanders increased spending on debit cards by 0.7% in August, with a pick-up in sales of big-ticket items such as furniture and hardware.

Paymark data showed debit card transactions jumped 8.3% while credit card sales grew just 1.5%.

“This weaker report does highlight that the recovery in consumer demand is likely to be muted, with households remaining cautious while unemployment continues to rise,” said Jane Turner, economist at ASB.

The retail report may provide some relief for the central bank, which raised concern in last week’s monetary policy review that a revival in consumer spending could stall any improvement in the nation’s savings rate, she said.

Shares of Warehouse Group, the biggest retailer on the NZX 50 Index, fell 1.7% to $4.18, driving the NZSX Consumer Index down 0.1%.

Spending at department stores declined 2.2% in July, according to the government statistician.

Other retailing, which includes everything from antiques, to florist sales and garden supplies, fell 2.4%. Recreational goods sales rose 3.3% and accommodation gained 3.3%.

Motor vehicle retailing rose 2.1% while auto fuel sales fell 2.9%.

Businesswire.co.nz

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