“Spending appetites are gradually firming, including a lift in some discretionary categories,” he said. “The result was well ahead of our own forecast and the average market forecast for a fall in spending over the June quarter.”
Eight of the 15 retail industries had higher retail sales volumes in the June 2025 quarter compared with the March 2025 quarter, after adjusting for price and seasonal effects, Stats NZ said.
The biggest contributors were:
- electrical and electronic goods retailing – up 4.6%
- supermarket and grocery stores – up 1.3%
- pharmaceutical and other store-based retailing – up 1.2%
- department stores – up 1%
“At first glance, today’s result seems at odds with comments from the retail and hospitality sectors of continued soft trading conditions. But digging under the surface, we can start to see what’s going on,” Ranchhod said.
In several sectors (especially durable items for the home), spending levels remained well down on the levels we saw in 2021, he said.
In addition, while spending levels were turning higher, spending growth remained quite modest – the volume of goods sold rose around 2.5% over the past year, compared to gains of around 4.5% per annum before the pandemic.
“But while the retail sector is still confronting some tough trading conditions, we are starting to see signs that the long-awaited recovery is taking shape,” he said.
“Spending levels have risen for the past three quarters. That includes gains in discretionary areas like recreational goods and electronics. However, it is still a mixed picture with spending in sectors like hospitality still flat.”
The new data was an encouraging sign for spending over the remainder of 2025, Ranchhod said.
“Spending levels are already pushing higher, and the full impact of the large reductions in interest rates over the past year is yet to be felt.
“Over the coming months, increasing numbers of borrowers will be rolling on to lower borrowing rates. The related lift in disposable incomes could be sizeable in some cases, and that’s set to boost spending through the latter part of the year.”
There were still some headwinds for the retail sector.
Most notably, unemployment was likely to rise to around 5.3% before the end of the year, he said.
“Even so, it looks like a recovery in the retail sector is now taking shape.”
Liam Dann is business editor-at-large for the New Zealand Herald. He is a senior writer and columnist, and also presents and produces videos and podcasts. He joined the Herald in 2003.
