NZ retail sales falls more than expected

WELLINGTON - Retail sales fell a seasonally and inflation-adjusted 0.5 percent in the June quarter, a bigger drop than the 0.3 percent fall expected by economists' in a Reuters poll, figures out today from Statistics New Zealand show.

The figure could be seen as supporting evidence of an economic slowdown, giving the Reserve Bank some solace in its fight to return inflation to the 1-3 percent target band.

Seasonally-adjusted retail sales in the month of June were up 0.1 percent, or $4 million, following an increase of 1.5 percent in May. The economists' median prediction was for a fall of 0.3 percent.

Of the 24 retail industries tracked in the survey, 12 recorded seasonally-adjusted increases in sales and 12 decreases in the June quarter compared to the previous three months.

The largest retail sales rise was in automotive fuel retailing, up $122 million, although sales volumes actually declined 3.4 percent.

Second biggest growth was in supermarket and grocery stores, where sales were up $88 million and volumes up 3.3 percent.

The largest decrease was in motor vehicle sales, which were down $63 million. That followed an increase of 3.1 percent in the March quarter. With price effects removed, sales were down 4 percent.

The decreased sales coincided with rising fuel sales in the June quarter. Respondents within the industry had commented on larger car sales declining, with buyers moving to smaller models or motorcycles, SNZ said.

No other industry groups had dollar-value changes of more than $15 million during the June quarter.

Retail trade deflators showed prices increased in 16 of the 24 retail industries. Automotive fuel retailing had the largest price increase since the beginning of the series in September 1995, rising 12.6 percent in the June 2006 quarter, SNZ said.

Seasonally-adjusted sales increased across most regions in the June 2006 quarter, with the largest increases in Auckland ($72 million) and Wellington ($23 million), both up 1.4 percent.

The only regional decrease was in the North Island, excluding Auckland, Waikato and Wellington, where sales fell 0.1 percent, or $2 million.

- NZPA