September sales boost latest retail figures

Photo / Hawkes Bay Today

The value of seasonally adjusted total retail sales rose 0.8 per cent - $133 million - in the September quarter, said Statistics New Zealand this morning.

Pre-GST increase spending during the month of September was likely behind the small increase in the latest quarterly retail trade survey.

"This quarterly rise is mostly due to increased sales in the September month, particularly in furniture and floor coverings, and appliance retailing," business statistics manager Louise Holmes-Oliver said. "It's likely this reflects spending timed to beat the GST rise."

Both total and core retail sales (which excludes the four vehicle-related industries) increased in the September month, each up 1.6 per cent.

For the quarter, supermarkets and grocery stores were up 1.5 per cent -$57 million - the biggest contributor to the increase in the sales value.

ANZ economist Sharon Zollner said the latest retail figures were stronger than market expectations.

But actual sales volumes results still confirmed the "generally subdued state of the retail sector", said Zollner.

She said the sizable increases evident in appliance retailing - up 4.3 per cent - and furniture and floor coverings retailing - up 5.7 per cent - would be at least partly a 'beat-the-GST rush', and she would expect 'some payback' in the last quarter of the year.

"There was some evidence that households were cutting back on discretionary spending, with quarterly retail volumes lower for bars and clubs - down 6.1 per cent - and liquor retailing - down 5.1 per cent.

Evidence of a pre-GST rise in motor vehicle spending was not evident with the volume of motor vehicle retailing falling by 0.6 per cent.

"It is noteworthy that although sales volumes are higher than a year ago, they remain below March 2007 levels," said Zollner.

"Consumers are still being very cautious, focusing on repaying debt. As long as the housing market remains in reverse gear, this is likely to continue to be the case. "

She said she expected the current quarter to show a mild increase in spending but she did not anticipate any significant improvement in retail until next year, by which time the labour market will have improved on a more sustainable basis.

"Even then, the story is of a very sensible shopper spending within their means."

Goldman Sachs economist Philip Borkin described today's retail figures as showing "a reasonable surge as consumers looked to beat the GST rise."

"However, for the quarter, price discounting looks to have come to the rescue again, with reasonably solid volume growth. This should help to further allay fears that the economy as a whole contracted in the September quarter."

"For the September quarter as a whole, real spending was solid with price discounting again looking like it has come to the rescue," said Borkin.
"The solid retail volumes provide further evidence that the economy as a whole did manage to expand in the September quarter (despite the negative impact of the Canterbury earthquake)."

"We expect the outlook for consumer spending to remain somewhat of a slow grind. While households have encouragingly been in a period of balance sheet repair and the labour market is showing signs of improvement, we expect a weak housing market to ensure that cautiousness remains the order of the day."

The Statistics NZ figures show appliance retailing was by far the main contributor to the quarterly increase in sales volumes. Appliance retailing has been the largest single contributor to the rise in both total and core sales volumes in four of the past six quarters.

Auckland and Canterbury had the largest regional rises in the September quarter - both up 1.4 per cent - $76 million and $29 million, respectively.

During September, all regions showed robust growth, except for Canterbury, which recorded an increase of only 0.1 per cent - $1 million. The Canterbury earthquake occurred on 4 September 2010.

- NZ HERALD ONLINE