KEY POINTS:
Shop owners are starting to feel the pinch.
Retail sales fell a seasonally and inflation-adjusted 0.9 per cent in the September quarter as vehicle sales continued to suffer in a faltering economy.
Releasing the data today, Statistics New Zealand (SNZ) said it was the third consecutive quarterly decrease. Motor vehicle sales volumes, down 3.1 per cent in the latest quarter, were the largest single contributor to the fall in volumes in all three quarters.
The fall in the seasonally adjusted value of vehicle sales for the September quarter was 4.7 per cent or $88 million, from the June quarter.
The overall decline in retail volumes in the September quarter was not as bad as economists had expected, with the median in a Reuters poll having been for a decline of 1.3 per cent.
Despite the poor performance in vehicle sales for the quarter as a whole, for just the month of September seasonally adjusted vehicle sales rose 3.5 per cent.
That was the most important factor in a seasonally adjusted 0.1 per cent rise in retail sales in the month of September, SNZ said.
While vehicle sales rose in the month, the trend for the industry had been in decline since August 2007 and had fallen 16.4 per cent since then.
SNZ said that despite the drop in volumes for the September quarter, price increases, particularly in key industries such as supermarket and grocery stores, and fuel sales, resulted in total sales values remaining flat.
With a seasonally adjusted fall of just 0.1 per cent, or $22 million, compared with the June quarter, sales values had remained flat throughout 2008.
The volume of seasonally adjusted core retailing, which excludes vehicle-related industries, fell 0.2 per cent in the September quarter, while sales values were up 0.4 per cent, or $51m.
The drop in volumes was led by a 1.9 per cent fall in supermarket and grocery stores but, due to price increases, this industry showed a 0.5 per cent or $18m increase in sales values, SNZ said.
The trend for total sales volumes had fallen 3.7 per cent since the June 2007 quarter, making the current period of decline the most significant since the series began in September 1995.
The trend for total sales values eased in the latter half of 2007, from strong growth at the end of 2006 and start of 2007, and had been flat throughout 2008.
In the September month, core retailing excluding the vehicle-related industries, fell 0.5 per cent with lower sales in department stores, clothing and softgoods, and recreational goods . Those falls were partly offset by a rise in supermarket and grocery sales.
RBC Capital Markets senior economist Su-Lin Ong said there was an upside surprise in quarterly volumes but only because inflation was high in the quarter.
"Otherwise, the figures confirm the dire fundamentals for consumption in New Zealand. Mortgage rates are still high, confidence is shot and consumers are retrenching."
The data added to the case for a 100 basis-point interest rate cut from the Reserve Bank next month, along with further easing next year.
"Rates are far too high for the global background and need to come down sharply."
Westpac economist Donna Purdue said the outlook for the fourth quarter was better, with lower petrol prices and personal tax cuts feeding through into a bit of a spend-up heading into Christmas.
But it would be a short-term boost into early 2009, with falling house prices, rising debt levels and rising unemployment, which would see the consumer crawl back into the hole they were in earlier in the year.
- NZPA
