Retail sales rise as expected in July

Seasonally adjusted retail sales rose 0.5 per cent in July, exactly on economists' expectations, Statistics New Zealand said today.

The rise excluding car sales was a healthier 1.3 per cent.

Actual sales for the year were up 2.9 per cent, below the 4 per cent rate of annual inflation.

There was a $22 million fall in vehicle-related industries sales, mainly caused by a fall in car sales.

Fifteen of the 20 core retail industries contributed to the rise in core retail sales in July.

The largest increase was in supermarket and grocery stores.

Actual accommodation sales were down 8.8 per cent compared with July 2005, when the British and Irish Lions rugby team toured New Zealand.

Regionally, the remainder of the North Island and Wellington had moderate increases in seasonally adjusted sales in July, while all other regions remained relatively unchanged from June.

The retail sales trend continues to increase but has eased slightly since September 2005, SNZ said.

JP Morgan economist Jarrod Kerr said the ex-autos figures was pretty firm -- the highest reading since February.

"Still, the headline 0.5 per cent rise was not especially strong, coming from a low base in June, and doesn't suggest sales are accelerating.

"Overall, it adds to the reasons for the RBNZ to hold rates where they are. It doesn't suggest a further hike is needed, but such a resilient consumer means they won't be in any hurry to cut either."

UBS economist Robin Clements said it looked like a pretty strong figure all round and against the recent run of data.

"So it favours the (rates) 'on hold for longer' argument. But it is one month's data and whether that is enough to offset the likes of last week's very weak building work ... we're still juggling the balls at this stage."

- NZPA