Consumers keep hands in pockets

Retail sales were subdued in April. Photo / Herald on Sunday

Retail sales remained subdued in April.

Adjusted for seasonal effects, sales were down 0.3 per cent on March overall, and down 0.2 per cent when the automotive sector was excluded, Statistics NZ said.

Compared with April last year sales were up 2.7 per cent, or just 1.7 excluding the automotive sector.

Department stores recorded the largest fall in dollar terms, $11 million or 3.3 per cent, which partially reversed a 6.7 per cent increase in March.

Statistics NZ said the trend in department store sales had been declining since last November and was nearly 5 per cent below its peak in August 2008.

The largest increase was spending on accommodation, up $15 million or 7 per cent on March, extending a rising trend evident since the middle of last year.

Sales at gas stations were down 0.7 per cent or $10 million, despite small increases in petrol and diesel prices in the course of the month.

ASB economist Christina Leung said the data confirmed households remained cautious about spending on discretionary items.

"More recent electronic card transactions data suggest some improvement in spending in May," she said.

In addition, she expects an increase in spending on durables in the coming months as households bring forward purchases of big-ticket items ahead of the rise in the GST rate on October 1.

"Overall, we expect a continued recovery in the labour market this year will underpin a recovery in household spending over the second half of 2010."