Retail sales much stronger than expected in February

Retail sales in February rebounded sharply, up a seasonally adjusted 1.9 per cent, on January, Statistics New Zealand said today.

The sales were far stronger than economists' forecasts of a 0.3 per cent lift.

Excluding car sales, retail sales were up a seasonally adjusted 1.4 per cent on January.

Total actual sales in the year to February 28 rose 5.1 per cent.

Increases were recorded for 17 of the 24 retail industries in February. Those industries recording larger dollar-value increases were motor vehicle retailing (up $34 million), cafes and restaurants (up $20 million) and accommodation (up $9 million).

The increased sales in cafes, restaurants and accommodation coincided with the school holiday period extending until after the Waitangi weekend break.

The underlying sales trend for the retail sector has continued to increase since May 1998, with an average monthly increase of 0.5 per cent, SNZ said.

On a regional basis, seasonally adjusted sales increased across New Zealand, with Auckland and the Remainder of the North Island regions recording the largest increases in the month.

The beleaguered New Zealand dollar jumped sharply on the news.

It had rallied half a cent to US61.54c from yesterday's close overnight but jumped another one US cent to US62.50c on the surprise sales data.

"It was obviously a technical bounce after a very weak run, which was always the risk," First NZ Capital economist Jason Wong said.

"It doesn't really change our view of a very soggy retail environment. We expected a big bounce in January which never came, and obviously it has just come in February instead. The data is very volatile, and this data shouldn't change anyone's view really."

- NZPA