Retail sales rebound in March
The volume of retail sales increased a seasonally adjusted 1.5 per cent in the three months ended March 31, from a 0.9 per cent rise in the December quarter, according to the latest figures by Statistics New Zealand.
The total value of retail sales, seasonally adjusted, rose 2.6 per cent in the quarter to $21.7 billion, ahead of the 1.6 per cent pace in the December quarter.
After softness in the latter half of 2016, retail spending rebounded in March, with much of the result driven by a very large 5.9 per cent increase in motor vehicle sales. However, there were gains in most categories, with core spending up 1.2 per cent over the quarter.
March saw a strong lift in spending on food services (i.e. dining out), as well as continued gains in spending on accommodation – both consistent with the strong tourist season. There were also solid gains in spending on household durable items like electronics and furnishings.
There was some softness in areas like hardware and recreational items. However, these declines were relatively modest.
Spending was up in all regions, with larger gains in the Waikato (+3 per cent) and Canterbury (+2.8 per cent). Spending in Auckland was up 1.4 per cent, with only a modest 0.7 per cent gain in Wellington.
Sales values rose for 10 of the 15 industries in the quarter, with fuel retailing up 6.5 per cent to $2 billion and motor vehicle and parts retailing up 5.9 per cent to $3.2b.
Non-store and commission-based retailing rose 9.6 per cent to $389 million.
Four of the 15 industries fell, with supermarket and grocery store retailing down 0.2 per cent to $4.5b while hardware, building and garden supply retailing was unchanged at $1.8b.
Satish Ranchhod, senior economist at Westpac said after signs that spending was losing momentum in the latter half of 2016, this is a positive result, pointing to some continued momentum in activity.
“However, we have some doubts this strength will be sustained over the remainder of this year,” he said.
“One of the big drivers of spending in recent years has been low interest rates and the related strength in house prices.
“This has been a particularly large driver of spending on durable household items like furniture. But in recent months, interest rates have risen and house price growth has pulled back.
“We expect that this will result in more moderate household spending growth over the coming months. This will offset some of the boost to spending from continued strong population growth and strong tourist inflows.
“Turning to prices, we estimate that overall prices were up close to 2 per cent over the past year. However, there are some divergent trends across sectors. Much of the recent increase in prices has been due to food and fuel costs. Looking at prices for other goods, things continue to look subdued.”