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NZ retail sales rise 1.2% in final quarter of 2015, led by tourism, housing activity

Tuesday 16th February 2016

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New Zealand retail sales volumes increased in the final quarter of 2015, led by housing and tourism activity.

The volume of retail sales gained a seasonally adjusted 1.2 percent in the three months through December, from the September quarter, according to Statistics New Zealand. That lags behind the 1.4 percent forecast in a Reuters poll of economists. Retail sales volumes for the September quarter were revised lower to 1.5 percent from 1.6 percent. 

The New Zealand dollar slipped to 66.38 US cents, from 66.51 cents immediately before the report was released at 10:45am.

Core retail volumes, which excludes the more volatile vehicle related industries, increased 1.4 percent in the December quarter, the agency said. 

New Zealand consumer spending is being buoyed by record migration and tourism, low interest rates and a strong housing market. That's helping the economy offset weaker returns for commodities as prices for dairy products, the country's largest goods export, slump below the average farmer's cost of production.

"Combined with strong population growth and low interest rates, low prices have provided a significant boost to spending," Westpac Banking Corp senior economist Satish Ranchhod said in a note. "This has been reinforced by a strong tourist season which has given spending in areas such as accommodation a boost. These factors are expected to continue providing some supporting for spending over 2016 (though over the coming year the strength of spending will be challenged by the deterioration in the global economy and weakness in export prices)."

Twelve of the 15 retail industries recorded higher volumes in the December quarter, while 11 had higher sales volumes, according to the seasonally adjusted figures.

Hardware, building and garden supplies led the increase, with volumes rising 5.3 percent and values up 5.5 percent to $1.68 billion. Fuel retailing volumes gained 3.7 percent while the value advanced 2.5 percent to $1.94 billion. Accommodation sales volumes gained 4.8 percent, with the value jumping 6 percent to $868 million. Electrical and electronic goods retailing volumes edged up 2.7 percent as the value advanced 2.2 percent to $779 million. Department store volumes increased 1.9 percent, with the value up 1.8 percent to $1.11 billion.

Non-store and commission-based retailing, which includes local online vendors, increased 3.9 percent on a volume basis, with a 3.7 percent rise in value to $330 million.

Sales of recreational goods showed the biggest decline, falling 2.5 percent on a volume basis for a 2.6 percent drop in value to $515 million.

On an unadjusted basis, the volume of retail spending rose 5.3 percent in the December quarter in 2015, compared with the same quarter in 2014. The value of actual retail sales rose 4.4 percent to a record $21.77 billion. Stripping out vehicle-related spending, the volume of core retail sales increased 5.2 percent while the value increased 5.2 percent to a record $17.1 billion.

Retailers' inventories were 4.6 percent higher at $7.43 billion compared with the year earlier, with core retail stocks up 5.3 percent to $5.65 billion.

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