Source: Radio New Zealand
Sales in hardware, building, and garden supplies rose in the final quarter of last year.
- Retail sales volumes up 0.9 percent in December quarter on previous quarter, up 4.4 percent on year ago
- Strongest sales seen in electronics, DIY and garden supplies
- Twelve of 15 store types report higher sales, 12 of 16 regions have higher sales
- Lower interest rates feeding into spending, and lift growth prospects
Stronger than expected retail spending at the end of last year is fueling talk of a solid quarter of economic growth.
Stats NZ data showed a 0.9 percent rise in retail volumes – which exclude the effect of inflation – in the December quarter, to be 4.4 percent higher than a year ago.
“Spending on discretionary items helped drive an overall increase in retail activity,” economic indicators spokesperson Michelle Feyen said.
“Pharmaceutical and other store-based retailing, electrical and electronic goods, and hardware, building, and garden supplies saw the largest increases in activity this quarter.”
The quarterly rise was the fifth in a row, but weaker than the September quarter. Core retail spending, which excludes fuel and automotive spending, grew 1.5 percent and was the strongest in more than two years.
Falling interest rates, rising spending
Economists were enthused by the numbers, which they regarded as an indicator that lower interest rates were feeding into consumption, which would feed into economic recovery.
BNZ economist Matt Brunt said the strength of the past year had to be seen in the context of the battering the retail sector had taken from the downturn and recession in recent years.
“Retail sales volumes are still 5.1 percent below their peak in mid-2021. And merchants continue to report profitability challenges. But today’s figures are compelling evidence that genuine improvement is occurring.”
Even so Brunt said the BNZ was nudging up its growth forecast for the end of 2025 to 0.6 percent.
Infometrics economist Rob Heyes said the growth in spending was apparent in more parts of the country and through a wider range of store types.
“But with an increasing number of homeowners rolling onto lower fixed mortgage rates, the benefits of the recovery are being felt in spending growth across most regions.”
Strongest regional growth was in the South Island at 2.3 percent for the quarter compared to the North Island’s 1.5 percent, although the biggest quarterly increase was in Hawkes Bay followed by Canterbury and Otago.
ASB economist Yen Nguyen expected the retail rebound to continue through the year.
“The retail sector’s recovery is expected to continue gradually, with a more pronounced improvement anticipated in the second half of the year, driven by lower borrowing costs and a broadening economic recovery.”
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
