Cold winter sends Kiwis to clothing stores, says Stats NZ

Wet and cold weather has sent NZers to the clothes shops, says Statistics NZ. Photo/Christchurch Star

Highest-ever retail sales figures for clothing have coincided with an especially cold, wet and early winter, Statistics New Zealand (SNZ) says.

Clothing and softgoods retail sales figures for May increased 12.6 per cent, or $25 million, on the previous month - the largest monthly increase since the series began in May 1995, the SNZ retail trade survey showed.

"This unprecedented increase coincided with what has been described as an early start to winter. Compared with typical May months, most of the country has experienced above-average rainfall and well below-average temperatures," government statistician Geoff Bascand said.

Total retail sales figures for May increased 0.8 per cent, or by $41 million, on those of April , with supermarket and grocery stores also gaining, up 2.2 per cent or by $27m on figures for April.

ASB Bank economist Jane Turner said recent electronic card transaction data suggested that the May retail trade strength was "likely to be a one-off, pointing to a fall in spending over June."

This pattern would be consistent with bad weather bringing forward winter related purchases, said Turner. While there were some tentative sign of housing related spending picking up, this was from a low base and the pick up in housing demand had been "relatively modest" to date.

"Looking through the clothing one-off and housing related spending, the retail trade survey suggests that underlying consumer demand remains reasonably subdued," said Turner.

"Despite tax cuts and lower mortgage rates, consumer sentiment remains relatively benign as households adjust to a fall in net wealth and a less secure employment outlook. Precautionary saving is increasing, at the expense of discretionary spending (vehicle purchases in particular)."

UBS economist Robin Clements said the May retail stats were stronger than most expected, but this should not be taken as an indication that all was well in the sector.

Instead, it was "further confirmation that the sharp cut-backs of the last year and a half by consumers are coming to an end".

"Rising unemployment will be a headwind for consumption for the best part of a year ahead but a flattening out of retail activity will (along with an end to the housing drag on growth) make its own contribution to the economy stabilising in the second half of this year," said Clements.

The increases in the two core industries offset a fall in vehicle-related industries, with fuel retailers reporting a drop in sales of 2.7 per cent, or $14m, and motor vehicle retailers selling $10m less, or 1.4 per cent, worth of automobiles.

Bascand said sales by region for the month were mixed, slightly up in the South Island, while slightly down in the North.

"The trend in total sales has been in general decline since January 2008, but has currently flattened," he said.

- NZPA/ NZ HERALD STAFF