Retail sales hit 4-year high

Retail spending rose at its fastest rate in four years in the March quarter but consumers are expected to remain cautious for some time.
Figures from Statistics New Zealand (SNZ) yesterday showed seasonally adjusted total retail sales values rose 2 per cent in the March quarter, with rises in all regions except Canterbury, which was down 2.2 per cent.
The two vehicle-related industries were by far the largest contributors to the nationwide rise, with vehicles and parts retailing up 5.9 per cent, and fuel retailing up 5.6 per cent.
The value of core retail sales, which exclude vehicle-related industries, rose 0.9 per cent.
The volume of total retail sales rose 0.9 per cent in the March quarter, the largest rise since the December 2009 quarter, following two quarters of falls. Vehicles and parts volumes rose 6.3 per cent, while fuel volumes were down 3.9 per cent. The volume of core retail sales rose 0.7 per cent.
ASB chief economist Nick Tuffley and economist Christina Leung said an improvement in sales of major household items such as furniture and electronic goods and vehicles had driven the increase in retail spending.
The high New Zealand dollar through late 2010 had increased the scope for widespread discounting of those imported consumption goods, which was likely to have encouraged sales, the ASB economists said. There had also been anecdotes of households in Christchurch rushing out to replace appliances and other major items damaged in the February earthquake.
That suggested other spending in the region had been disrupted immediately after the quake.
It was encouraging to see retail spending outside Canterbury holding up well, with the 3.2 per cent rise in Auckland much stronger than the nationwide average, the ASB economists said.
An improvement in housing turnover in Auckland in recent months was likely to have boosted sales of major household items such as appliances and furniture. Also, increased housing market activity tended to support higher consumer confidence more generally.
But households remained cautious and a recovery in retail spending was expected to be at a gradual pace in the coming year, the ASB economists said.
ANZ said yesterday's figures confirmed consumer spending had made a welcome return after going missing in action last year.
But data since the March quarter suggested retail momentum was easing, although more resilience was evident in pockets of core retail.
ANZ expected a modest strengthening in consumer spending over 2011, with households apparently choosing not to spend for now. But that could turn around quickly if the consumer mood improved, ANZ said. The SNZ figures put actual retail sales values up 3.4 per cent from the March 2010 quarter to $16.5 billion.
Actual volumes were up 0.8 per cent from a year earlier, with actual core retail volumes up 1.4 per cent. Yesterday's retail figures were the first produced since SNZ moved to quarterly reporting of the survey, rather than monthly.
SNZ did not accompany the latest retail figures with a commentary.