Cafes and restaurants lift retail figures

Retail sales were flat in October, up just $2 million on September when adjusted for seasonal effects, Statistics New Zealand says.

Excluding the automotive sector, sales were 0.5 per cent higher, but only because of a 10 per cent increase in sales in cafes and restaurants. Without that, "core" sales would have been down on the month before.

Compared with October last year, sales were 0.2 per cent down overall, and just 2.1 per cent higher excluding the automotive sector.

Electronic card transactions data for November, which were up 0.7 per cent month on month, suggested a solid rise when last month's retail spending is reported, said Deutsche Bank chief economist Darren Gibbs.

"That said, at this point retail spending seems to be doing no more than trending gently higher," he said. "Certainly at this point the improvement in consumer spending remains modest, considering the sharp rebound seen in consumer confidence and house prices in recent months."

Continued weakness in the labour market was undermining income growth and households' willingness to spend, Gibbs said.

ASB economist Jane Turner said the key areas of strength in October were in areas associated with tourism such as cafes and restaurants (up 10 per cent), accommodation (up 4.2 per cent) and bars and clubs (up 3.5 per cent).

"However, given the volatility in the monthly survey we are reluctant to put too much weight on a monthly increase in these categories," she said. "In addition there were five Saturdays in October, which could have boosted spending on retail entertainment."