Retail sales fell last quarter, rounding out year-long slide

Friday 13th February 2009

New Zealand retail sales fell in the fourth quarter, rounding out a year-long slide as the prolonged recession and rising jobless rate sapped consumer spending and spurred households to reduce debt and conserve cash.

Sales fell 0.6%, inflation adjusted, in the fourth quarter, following a 0.9% slide in the third, according to Statistics New Zealand. That exceeds the 0.5% decline forecast in the Reuters survey.

The downturn tracks a contraction in the economy in 2008 that is showing no sign of abating, even as the central bank slashes interest rates to revive growth. Warehouse Group managing director Ian Morrice last month said the outlook "remains uncertain as overall consumer spending is expected to remain weak." Clothing chain Hallenstein Glasson Holdings this month said first-half profit tumbled as much as 41%.

"As households deleverage there are less funds available for retail spending and this is likely to remain a persistent theme for some time," said Shamubeel Eaqub, economist at Goldman Sachs JBWere. "Until we have greater clarity on the outlook for jobs it remains difficult to call a trough in the retail cycle."

Eaqub said the benefits of lower interest rates and fiscal stimulus including tax cuts "may be concentrated in 2010."

The unemployment rate rose to 4.6% in the fourth quarter and some economists predict the rate will exceed 7% this year, as companies shed workers and defer new hires in response to the downturn.

In the fourth quarter, 17 of the 24 retail groups had reduced sales, with motor-vehicles dropping 4.9%, rounding out a year where they led declines. Supermarket and grocery-store sales dropped 0.7% and department stores sales fell 3.4%.

A measure of core sales, which excludes auto-related sales, was unchanged in the latest quarter.

By Jonathan Underhill

Comments from our readers

No comments yet