Retail sales show spending remains robust

Retail sales rose a seasonally and inflation-adjusted 1.0 per cent in the March quarter, Statistics New Zealand said, a touch above economists' median forecast of 0.8 per cent.

That follows a revised fall of 0.7 per cent in the December quarter.

The figures may do little to ease the Reserve Bank's inflation concerns, particularly when added to last week's jobs data which showed the labour market remained tight.

But for the month of March, seasonally-adjusted retail sales were down 1.0 per cent from February, worse than the median forecast of a 0.1 per cent fall.

Sixteen of the 24 retail industries recorded sales increases in the March quarter, with motor vehicle, retailing and department store sales volumes increasing 3.1 per cent and 4.4 per cent respectively.

A $31 million rise in automotive fuel retailing was price driven, with prices up 4.8 per cent and sales volumes down 2.4 per cent.

Supermarket and grocery stores had lower sales volumes, with a 0.8 per cent decrease for the quarter.

Growth in the underlying sales trend for total New Zealand had been steadily increasing since June 1998 but there were indications of the trend easing, with lower movements recorded since the December 2005 quarter.

A contributing factor to the slowing trend was a 5.4 per cent fall in the motor vehicle industry since the June 2005 quarter, SNZ said.

Seasonally adjusted sales were up across all regions in the March quarter, with increases of more than 2 per cent in all North Island regions except Auckland. Canterbury had the lowest increase with 0.9 per cent.

UBS chief economist Robin Clements said today's figures suggested retail activity remained "surprisingly resilient".

"The consumer remains fairly resilient and GDP numbers will be a bit better than previously thought," he told Reuters.

The monthly figures for March told a different story.

"The trend going into the end of the quarter did have a softer tone," Bank of New Zealand senior economist Craig Ebert said.

"There's weakness in the ex-auto number for the month, which sets up a more moderate tone going into the second quarter."

Mr Ebert said the issue in the coming months would be how rising petrol prices crimped household incomes.

"For the Reserve Bank I don't think it alters anything, it's not in any hurry to reduce interest rates."

The New Zealand dollar was a touch lower following the figures, trading at US62.65c by late morning from its US62.89c local open.

- NZPA