“However, there was at least some pick-up on June last year in the last few days of the month, although the level remain of activity remains low overall.”
Infometrics chief forecaster Gareth Kiernan said there had been a 12.6% decline in quarterly sales volumes per capita, seasonally adjusted, in the Stats NZ retail trade survey since the peak in June 2021.
That is more than the 10.3% peak-to-trough fall during the global financial crisis.
On an annual running total basis, spending is down 8.5% from the most recent peak.
Kiernan said if quarterly sales data plateaued at current levels through the rest of the year, which seemed optimistic at this stage, the decline from peak should come in at 9.9%.
That compared to a decline in annual per-capita sales volumes of 10% between March 1977 and September 1978 and another decline between June 1987 and December 1991 of 10.1%.
By comparison, the decline during the GFC on that basis was 8.5%.
“In short, it’s surpassing the GFC in terms of the contraction in per capita spend, and is close to going past the late-1980s share market crash/economic reforms/global recession, as well as the economic malaise of the mid-late 1970s,” Kiernan said.
It is having a sharp impact on retailers - Centrix data shows the rate of liquidation of retail businesses is up 44% year-on-year, the biggest increase of any business category the credit company tracks.
Chris Wilkinson of First Retail Group said constrained spending and a drop in the number of people visiting shops was being felt widely by retailers across the country.
“Job security, the high cost of living and declining asset values are all weighing on people’s minds which has shifting spending from wants to needs.”
He said retailers would be hoping that things would stabilise as interest rates lifted, and if the country could remain technically out of recession.
Retail NZ chief executive Carolyn Young said it was “super tough” for retailers.
She pointed to Westpac data showing consumer confidence levels down to rates seen in the 1987 crash.
“If you look at the period of time, we’ve been down for quite a long time, we’re still hanging down there.”
She said Wellington was particularly affected by Government job cuts, and the flow-on effects to other businesses.
Even hearing about redundancies was enough to dent confidence and make people think twice about spending, she said.
She said while there might be some relief as interest rates fell towards the end of this year and into next, the process would be slow because households would only feel the impact as they re-fixed their mortgages.
Young said to help businesses hold on, it would be useful to know what measures the Government had planned, and things such as changing the sick leave rules would help ease the pressure on businesses, or simplifying the Holidays Act.
“While the Government doesn’t have any money they have other levers they can use to remove red tape.”
-RNZ
