KEY POINTS:
Retail sales rose a seasonally and inflation-adjusted 3.8 per cent, or $539 million, in the March quarter, the largest increase since the series of figures started in 1995 and well above expectations.
Statistics New Zealand (SNZ) figures published today show the industries making the largest contribution to the increase were motor vehicle retailing, up 6.3 per cent ($153 million), and appliance retailing, which rose 9.1 per cent ($107 million).
The March quarter increase was well above the median prediction in a Reuters poll of economists where the figure was 1.8 per cent. It followed rises of 2.1 per cent in the December quarter and 1.1 per cent in the three months to last September.
The three months covered by the latest data includes three weeks after the Reserve Bank increased official interest rates by 0.25 of a percentage point, but not a second hike late last month.
Seasonally adjusted only, retail sales for the quarter were up 3.4 per cent from the previous three months, also the largest quarterly rise since the series started in 1995.
The core retailing group, which excludes vehicle-related industries, also rose 3.4 per cent, seasonally adjusted in the March quarter.
Of the 24 retail industries covered, 20 recorded seasonally adjusted sales increases in the March quarter, with six of the 10 largest retail industries recording sales increases of greater than 5 per cent, SNZ said.
The total retail sales trend had lifted in the past two quarters, following a slight easing between the December 2005 and September 2006 quarters.
The seasonally adjusted-only 5.8 per cent ($117m) increase in motor vehicle retailing sales in the March quarter, followed an increase of 4.7 per cent in the December quarter, and was the largest increase in the series since the December 2001 quarter.
Retail trade deflators showed that prices for motor vehicle retailing increased 0.4 per cent in the March quarter, SNZ said.
The rise in motor vehicle retailing sales came as statistics from Land Transport New Zealand showed that the number of car and station wagon registrations increased 1.9 per cent compared with the December 2006 quarter.
A seasonally adjusted 6.7 per cent increase in appliance retailing sales, following increases of 5.2 per cent and 4.2 per cent in preceding quarters, resulted from a 9.1 per cent increase in sales volumes.
Prices in the appliance retailing industry had been decreasing since the September 2002 quarter, falling a further 2.4 per cent in the latest three months.
For the March month, seasonally adjusted total retail sales were up 1.3 per cent from February, compared to the median prediction in the Reuters poll of a 0.2 per cent decline between the two months.
The March increase followed increases of 2.1 per cent in February and 0.5 per cent in January.
Core retailing, excluding vehicle related industries, was up 0.8 per cent in March, SNZ said.
In dollar terms the largest increases in the month were in supermarket and grocery stores, up a seasonally adjusted 2.9 per cent ($32m), followed by automotive fuel retailing up 3.9 per cent ($19m) and motor vehicle retailing up 2.4 per cent ($17m).
The New Zealand dollar shot up about half a US cent to US73.80c on the data.
"It's through the roof," said BNZ chief economist Tony Alexander. He said the data showed that consumers were still happy and prepared to spend money.
"These numbers are much stronger than anyone was expecting," he said.
Strong retail sales data usually implies the need for more interest rate rises but the picture is more complicated this time because this data does not show the impact of interest rates rises already announced by the Reserve Bank.
"It increases the probably of interest rate rises but we have to remember this goes up to the end of March. The first tightening was on March 8 and they tightened again on April 26.
"So this doesn't really capture the impact of interest rate increases yet," he said.
- NZPA
