November retail sales beat all predictions

While many retailers show signs of having suffered from soggy Christmas holiday weather, new figures show retail sales in November outstripped expectations.

The rise will dampen thoughts of an interest rate cut as the lowest jobless rate in 19 years buoys consumer confidence.

Retail sales gained 0.7 per cent from October, Statistics NZ said yesterday.

Sales by furniture stores increased 2.7 per cent. Sales in the clothing and soft goods category, which includes curtains and household linen, rose 4.7 per cent.

Sixteen of the 24 store categories surveyed had increased sales. Sales at supermarkets and grocery stores, which make up a fifth of all sales, rose 0.6 per cent. Department store sales gained 0.9 per cent.

Vehicle dealer sales fell 3.7 per cent from a record in October. Still, car sales have risen in four of the past five months.

Fuel sales jumped 5.4 per cent. The average price of petrol was 14 per cent more than a year earlier.

Taking out sales through car dealers, workshops and fuel outlets, retail sales rose 1.1 per cent in November from October.

Bank-bill yields rose on concerns that rising consumer spending, which makes up 60 per cent of New Zealand's $82 billion economy, may fuel inflation.

Reserve Bank Governor Alan Bollard said last month that last year's six interest-rate increases would keep inflation in check, stoking expectations that he may cut rates later this year.

"Our view is there will be no change in the rate in the foreseeable future," said Sean Comber, economist at ANZ National Bank. Comber is one of four economists surveyed yesterday who expect the interest rate to stay at 6.5 per cent until at least September 30.

Eight economists expect that it will be cut by then.

- NZPA, BLOOMBERG