Brian Fallow

The Economics Editor of the NZ Herald

Shoppers fail to deliver expected Christmas retail lift

Analysts expected sales volumes to rise 1.7 per cent in the quarter that included Christmas spending. Photo / Natalie Slade
Analysts expected sales volumes to rise 1.7 per cent in the quarter that included Christmas spending. Photo / Natalie Slade

Retail sales rebounded over the last three months of 2013 from a weak September quarter, but the bounce was less than other indicators had led economists to expect.

Retail sales rose 1.2 per cent, adjusted for price changes and seasonal effects, having eked out just a 0.2 per cent rise in the September quarter.

But much of the increase occurred in petrol stations, where sales volumes rose 5.7 per cent.

Excluding the automotive sector, "core" retail sales rose 0.7 per cent in real terms, after contracting 0.2 per cent in the September quarter.

In dollar terms sales rose 1.2 per cent overall, seasonally adjusted, and 1 per cent in the core sector led by clothing, footwear and accessories, and automotive fuels.

On the measure retailers prefer themselves, actual sales at $19.9 billion were up 3.9 per cent on the same period in 2012, a result Barry Hellberg of the Retailers Association said was in line with the association's expectations.

Core sales also rose 3.9 per cent over the year, to $15.4 billion, but that represents a slowdown in the annual growth rate from the 4.4 per cent and 4.3 per cent recorded in the June and September quarters.

Market economists had expected sales volumes to rise 1.7 per cent in the quarter, based on such indicators as surveyed consumer confidence, merchants' responses to NZIER's quarterly survey of business opinion, and electronic card transactions (which capture about two-thirds of retail sales).

ASB economist Daniel Smith found it baffling that supermarket sales volumes (nearly a quarter of the total) fell 0.5 per cent in the quarter, to be just 0.5 per cent up on December 2012, despite a 4.5 per cent increase in electronic card spending on consumables and a net inflow of 22,500 migrants over the year.

Statistics New Zealand says prices in supermarkets and grocery stores rose 1.9 per cent over the year.

Accommodation sales fell 2.4 per cent in real terms, on top of a 2.8 per cent decline in the September quarter, to be 2.5 per cent down on the December 2012 quarter.

That was at odds with strong figures for overseas visitors and guest nights, Smith said.

Westpac economist Felix Delbruck described the quarter's 0.8 per cent real increase in sales of motor vehicles as "surprisingly tepid".

ANZ chief economist Cameron Bagrie said given the positive consumer mood, the milder rise in retail spending was a clear positive from the standpoint of prolonging the economy's expansion.

"Our estimates suggest that overall the household sector is not going on a spending spree, with more equity being injected to housing stock than is being withdrawn from it.

"Spending growth - up [nearly] 4 per cent on a year ago - is travelling below income growth. It's common sense that it does, but common sense doesn't always apply to spending trends," he said.

Price declines look to be becoming less widespread.

The deflators for five of the 15 retail subsectors recorded falls, compared with seven in the September quarter and 10 in the December 2012 quarter.

Bank of New Zealand economist Craig Ebert said the quarter's rise of 0.1 per cent overall and 0.3 per cent in the core subsectors could not be described as alarming.

"But that this has occurred, despite the very high exchange rate, tallies with other signs that businesses might be starting to increase margins."

- NZ Herald

© Copyright 2014, APN New Zealand Limited

Assembled by: (static) on production apcf02 at 23 Dec 2014 13:23:49 Processing Time: 302ms