Retail sales grow more quickly than expected

11.30am

Retail sales grew at a faster than expected 0.8 per cent in the June quarter.

Yet another set of statistics came out today showing the economic slowdown forecast by economists has failed to materialise.

Retail sales grew at a seasonally and inflation adjusted 0.8 per cent in the June quarter against economists' predictions of 0.3 per cent.

Excluding car sales and repairs and petrol sales, sales were even stronger with a 1.5 per cent rise.

On Tuesday, figures showed unemployment fell to a 17-year low of 4.0 per cent, better than the forecast 4.3 per cent.

Today's figures point to the economy having expanded far more rapidly in the June quarter than forecast, just as it did in the March quarter.

It also virtually guarantees the Reserve Bank will hike interest rates again next month.

New Zealanders have been on a spending spree since before Christmas.

Retail sales were up 2.6 per cent in the March quarter and 1.2 per cent in the December quarter.

June month retail sales were also better than forecast -- rising a seasonally adjusted 1.3 per cent against the 0.5 per cent median forecast of 12 economists polled by Reuters.

Actual retail sales were 8.9 per cent higher than in June 2003.

Fifteen of the 24 store types recorded higher seasonally adjusted sales in the June quarter.

The largest dollar increases occurred in petrol sales, due largely to higher petrol prices that rose 6.6 per cent in the quarter and 15 per cent for the year.

The $1 billion of petrol sales in the June quarter was the largest ever even though volumes were down.

The takeaways group had the next largest increase with a $25 million rise, supermarket and grocery stores went against the trend with a $27m fall in sales.

Department stores also had a negative figure, while clothing and soft goods retailing was unchanged.

Appliance sales were up 7 per cent in the June quarter although prices fell by 1.9 per cent, the seventh consecutive quarterly drop.

The drop in TV and video equipment prices was largely behind the fall.

Over the year, credit card billings were up 11.4 per cent, short term visitor arrivals up 23.8 per cent, and kiwis leaving on short term trips overseas were up 34 per cent.

The rebound in tourism was significant, with the rise in tourist numbers in the June quarter the biggest since the March quarter of 1974 when the Christchurch Commonwealth Games were held.

The number of guest nights used in June were up 16 per cent on June 2003. The long term trend in retail sales has been rising since September 1998 but the rate of increase has been easing back in the last couple of quarters, SNZ said.

- NZPA