New Zealand retail sales unexpectedly rose in the second quarter, the first such increase since September 2007, as the country draws closer to climbing out of its deepest recession in more than 30 years.
Sales volumes grew a seasonally adjusted 0.4 per cent in the three months ended June 30, following a record fall of 2.7 per cent in the previous quarter, according to data released today by Statistics New Zealand. Economists predicted the quarterly figure wouldn't change from the previous period. Sales grew 0.1 per cent in June from a month earlier, against forecasts for a 0.3 per cent decline.
"It points in the right direction, that the economy is closer to exiting the recession, which could happen in the September quarter," said Philip Borkin, economist at ANZ National Bank. "We're starting to see encouraging signs a base is beginning to form in retailing."
Retail sales kept growing in July, with figures this week showing electronic card transactions rose 1.2 per cent. While card transactions rose last month, an increased proportion were on debit rather than credit cards, suggesting consumers may be taking heed of Reserve Bank Governor Alan Bollard's warning to avoid a return to a borrow and spend mentality. A resurgent housing market prompted Bollard to make the statement in June.
The prospect of rising unemployment will probably restrain growth in consumer spending "for some time yet," according to Jane Turner, economist at ASB.
The central bank predicts the jobless rate will peak at 7.1 per cent next year from 6 per cent currently.
Core retailing, excluding auto sales, rose 0.2 per cent in the second quarter, with 11 of the 20 industries surveyed advancing.
Appliance retailing gained 3.1 per cent, supermarkets and grocery increased 0.9 per cent and cafes and restaurants climbed 2.5 per cent. Other retailing, such as antiques and used goods, flowers and garden supplies, watches and jewellery, slumped 9 per cent in the three-month period.
The NZSE Consumer Index, which includes the listed retailers, rose 1.4 per cent today and is up 8.4 per cent in the past month. South Island department store Smiths City climbed 6.1 per cent to 35 cents, children's clothing chain Pumpkin Patch gained 3.3 per cent to NZ$1.90 and Warehouse Group, the biggest retailer on the NZX 50, rose 2 per cent to NZ$4.08.
Retailers wound down their stock over the June quarter, with the actual value held 5.5 per cent, or NZ$310m , lower than the same period a year earlier, with 15 of the 24 retail industries cutting stock levels.
Borkin said the unwinding of stock came as retailers cut back on imports and sold off their goods as demand dried up with the downturn. "It's not really surprising that stock was unwound - they were at a high level across the country," he said.
Motor vehicle retailers slashed stock 24 per cent while department stores cut their holdings 10 per cent and recreational goods reduced stock levels 11 per cent. Clothing and soft goods retailers boosted their stock levels 23 per cent, while supermarket and grocery stores lifted their stock 10 per cent and appliance retailers 13 per cent.
-BUSINESSWIRE
