The latest retail sales figures from Statistics New Zealand show retail activity fell 1.2% in the June quarter, extending the sales decline the sector has been experiencing over the past two years.
Stats NZ says 11 of the 15 retail industries it tracks had lower sales volumes in the June quarter compared with the March quarter, and the fall in sales continued the “downward trend” observed in the last eight quarters.
On a yearly basis, the June quarterly volume figures were down a further 3.6% on the comparable figures for the June 2023 quarter.
In that same period, Stats NZ’s national population data estimates the country’s population grew by 1.8% or 93,500. It means more people are spending much less than a year ago.
Stats NZ found card spending fell 0.1%, or $6.3 million during the month of July on a seasonally-adjusted basis, according to the latest data on electronic card transactions last week.
July marked the sixth month in a row that electronic spending throughout the country fell but it is also the smallest decrease in that time as well.
According to Stats NZ, the big contributors to the decline in retail sale volumes during the June 2024 quarter were:
- electrical and electronic goods retailing – down 6%
- motor vehicle and parts retailing – down 2.7%
- food and beverage services – down 1.9%
- clothing, footwear, and personal accessories – down 4.1%
“Retail sales decreased the most in the electrical and electronic goods industry and the motor vehicles and parts industry. By contrast, supermarket sales were up in the June quarter,” Stats NZ’s business financial statistics manager Ricky Ho said.
Supermarket and grocery store sales volumes, meanwhile, were up 2.1% while sales from pharmaceutical and other store-based retailing rose an even higher 3.2%.
On a retail sales value basis, the largest industry movements in the June quarter were:
- motor vehicle and parts retailing – down 4% or $155 million
- supermarket and grocery stores – up 1.5% or $99 million
- accommodation – down 6% or $83 million
- fuel retailing – down 2.3% or $58 million
- pharmaceutical and other store-based retailing – up 2.6% or $52 million
On a yearly basis, the total value of stock held at 30 June was down by 2.1%, or $197 million, to $9.2 billion compared to a year earlier.
Stats NZ said the total volume of retail sales per person fell 1.5% in the June 2024 quarter compared with March and it’s the tenth consecutive quarter to see a fall, after adjusting for seasonal effects and price inflation.
“Retail sales volumes per person have been falling for the last two-and-a-half years. The last time we saw several quarters of consistent falls was between 2007 and 2009, which coincided with the global financial crisis,” Ho said.
ANZ economists Henry Russell and Miles Workman said the 1.2% fall in retail sales volumes was slightly lower than both the 1% fall ANZ had penciled in and the market’s expectation of a fall of 0.9%.
It was still continuing the “downward slide” that retail sales volumes had been experiencing since the start of 2022.
“Overall, the level of retail spending remains very soft, and despite interest rates now heading lower, there are still plenty of headwinds, which should see weakness persist over 2024,” they said.
ASB senior economist Mark Smith said ASB expects challenging conditions for the retail sector to continue for a while yet.
“Cost of living increases are slowing, but the major handbrake on household spending is expected to be deteriorating labour market conditions,” he said.
Westpac senior economist Michael Gordon said retail sales volumes were now down 8.7% from their peak at the end of 2021.
“Retail sales have been restrained by both rising interest rates, which have squeezed the budgets of mortgaged households, and rapidly rising prices that have eaten into consumers’ purchasing power (retail spending in dollar terms is still up 4% compared to 2021),” Gordon said.
“Both of these pressures are now starting to ease, though they are likely to be replaced by concerns about job security and income growth.”
58 Comments
The food and beverage subsector is the perfect example - operates on high costs and razor-thin margins supported only by high volumes. Thousands of business operators in hospitality across NZ have been taking zero dollars out of the business and dipping into savings to support themselves and even the business.
We don't really need 200+ hospo businesses in my town of 105K, especially considering a sizeable number of these need constant infusion of low-wage migrant workers to survive.
Of the eight industries tracked by XSBI in New Zealand, five of them had productivity levels above the national average in 2023 ($102.40), led by real estate services (NZ$125.20/hour). The industry with the lowest productivity was hospitality, generating only NZ$14.30/hour.
She also said that hospitality’s underperforming productivity is bleak news for the struggling industry. New Zealand’s hospitality workforce has a higher proportion (around 30%) of short-term and temporary migrant workers than Australia (around 15%) and the UK (around 16%).
“We can see there are country-specific dynamics that might be contributing to hospitality’s overall performance.”
more affordable housing is a good thing, I am all up for it. I'd even support the idea people get bigger income, real income.
just as long as everyone fully understands what come along with dropping housing prices. 70% percent of kiwis own their own homes, many has put all their savings into the home they live. except now their wealth just vanished while some others cheers when this happens. I find it rather ironic.
Whilst Interest is a financial site, most of the comments section is trying to make it an ethics and morality site. You see, to many, when they see others do better financially, instead of trying learn and to rise themselves up, they rather try to tear the others down, by questioning their morality.
But it’s far from a purely financial site, and that’s what makes it interesting.
A wide range of social, political, economic, environmental, ethical matters are traversed in articles on this website. Obviously they usually connect in with economics, if not finance.
I guess for me the problem is that each and every first world consumer is conducting a significant amount of exploitation for their own personal benefit.
That's just deemed acceptable behaviour, and anyone profiteering over and above that is all of a sudden a baddie.
Glass houses and all that.
The two interrelate Yvil.
Most people here are successful, have money but want to maintain that wealth and their lifestyle in the LONG term.
As you get older and wealthy for longer it makes sense.
That means we have to keep the nz economy strong to maintain the value of our assets and our lifestyle.
In turn that means we have to think socially and environmentally in order to make and create wealth for the future.
So it's more than morals. It's financial sense.
Just thinking about how much money one individual can make over the next 6 months or even 2 years . Is pretty poor financial planning or investing.
Just thinking about how much money one individual can make over the next 6 months or even 2 years . Is pretty poor financial planning or investing.
You have to be trying to do both.
I.e. making sure your time is valuable today, with a longer target to make it more so in future.
But then valuing time is kinda tricky. What's an hour of time in an outdoor bathtub with a significant other worth? More than doing lame work stuff.
Speculatively priced housing is not wealth - unless you cash out of the market.
People should say ‘what is the fundamental value of the asset I own based upon historical norms’ vs ‘oh look at that large number homes.co.nz just valued my house in this highly speculative market’
You real wealth if fully invested in housing could still be 25-30% below what you think it is right now. Unless of course, you have the balls to cash out of the market and sit on the sidelines.
Yeah, so "affordability", becomes an interplay between interest rates and prices.
But, prices are also something that changes due to affordability (the cost of finance, and prices/finance costs relative to income).
So unless some other variable changes (i.e. the country empties, or we're in a permanent declined economy), we have not really addressed affordability in any permanent, meaningful way.
People got super barred up when the rates when up. As if that was permanent.
I guess at 15+ years since the last actual downturn the fact things cycle all over the place isn't something people have much memory of. Many only know winning.
The alternative take is this is permanent end of times. Which is always a possibility, but in that case house affordability will be the least of everyone's problems.
The solution .. which will be forced on us. Is to make the house price rise happen at a slower rate ... closer to inflation.
There are many reasons we will be forced to do it.. buy the way to do it willbe to make housing less attractive as an investment opportunity.
Some ways (that are becoming acceptable to society ) are.. CGT, DTIs, tax that favors other investment methods. Reduced accom allowance spend via government. Etc etc.
Those things aren't proven to do that.
A CGT doesn't stop housing booms. It arguably gets added to the selling price for the buyer to pay. But maybe we can make a case for a CGT to a) balance tax liability away from active businesses/individuals B) raise more tax overall to pay for all the stuff we're deficient in.
The DTI, again, can't see it showing to halt housing booms. It assumes the potential buyers are already maxed out.
The cheapest, best way to suppress housing inflation longer term is to give your economy a massive kick in the danglers it'll take years to recover from.
Yes you'll find them crammed four to a room in some shady rental, or crowding around the "$5 Week" specials at Pak N Save because that's all they can afford, or as OldSkoolEconomics says they are queuing up at Western Union to remit money back home - whatever is left over at the end of the week.
Of course they still get to enjoy what's left of our crumbling infrastructure, healthcare system etc, so it's not all bad news.
Have a friend who had a boarder, his Family was allowed out, wife and 2 kids, really nice, hard worker great people. he asked his host if the entire family could move into his room. He is a Quant surveyor, we need more people like him, but they are not spenders, they will probably save every $$ buy a cheap house and make sure their kids get a better life all the while going to church each sunday.
Great people BUT NOT SPENDERS
I don't blame them/fault them for wanting to improve their lot in life - but is it really good for NZ (particularly the future prospects of Kiwis born/raised here) to bring in a bunch of people who will effectively do more work for less money by undercutting local workers and artificially pumping up the supply side of the labour market (because their peasant wages are still a great deal compared to back home) and who either won't/can't spend any of what they do earn except on the cheapest essentials. Something like a quant surveyor a bit different I guess, as ultimately that is a more specialist skill set. E.g. should we say "no" to a doctor moving to NZ who lives like a church mouse? Obviously not as we need more doctors. And need as in need, not as in 'my crappy restaurant can't function economically without effective slave labour'.
Purely anecdotal but when I go to Westfield Riccarton to do the weekly shopping there appear to be many "new Kiwis" from the category above who are packed like sardines into Pak N Save and maybe Kmart - buying the cheapest of the cheap stuff - but you rarely see them purchasing in the clothing stores, electronics stores, Farmers etc.
Once again they are entitled to save their money and be frugal as they see fit. But equally I don't see why we shouldn't be able to question the overall economic value. I mean the numbers seem to bear out it isn't working.
You can also find them filling there fish buckets up the waimak (20 finned fish) and scouring the rock pools and beaches for any sealife most weekends, after it has been pillaged a rahui is announced and limits never return in full or it permantly closed
Is fishing only for Maori and white people? Sounds like you're suggesting that migrants are untrustworthy.
There's bad actors everywhere. However, there's a couple of extra factors for some cultures:
- if they've come from a place of scarcity, they're going to be more motivated to over harvest
- not everywhere has the same sorts of ecological concerns in regards to fish size, time of harvest, volume, etc
Time for a clean out ...
Data from economist Shamubeel Eaqub showed that the number of food and beverage and hospitality businesses in New Zealand had grown more than 30 percent since 2000, on a per capita basis.
"It has also grown as a share of the economy. It's fine when things are going well, but it becomes a fight for stretched consumer dollars in a recession. Butter spread too thin…
"The reality is we have a record number of hospitality businesses in New Zealand today - too many. We've seen too much growth in hospitality businesses in the last five years relative to population. Interest rates were free, money was sloshing around in the economy.
https://www.rnz.co.nz/news/national/525922/new-zealand-s-shrinking-cafe-scene
If it's any consolation, retail spend per capita is being decimated in Aussie as well...except for one demographic, boomers. The spending of the 25-39 yo demog is absolutely dire. You might say that the boomers don't give a rats. Actually, they should.
https://www.news.com.au/finance/economy/australian-economy/graph-reveal…
If only those poor younger Aussies had a larger, wealthier, easy to migrate neighbor to escape to.
Instead they're going to have to fight it out with all these Kiwis coming over, suppressing their wages and taking jobs.
And iron ore income is going kaka in it's budgie smugglers. They're in for more debt, more taxes, and reduced services (maybe all 3).
From your link and worth emphasising:
"the recent cohort of retirees in aggregate is more affluent and has greater incomes than any generation before them, delivered to them through decades of rocketing property prices and a longer duration with which to build wealth...and they are spending accordingly.
On the other hand, in the last three years working age Australians have experienced the worst decline in real wages on record, seeing 15 years’ worth of growth erased."
On the other hand, in the last three years working age Australians have experienced the worst decline in real wages on record, seeing 15 years’ worth of growth erased."
Yes. And whose labor is expected to fund the retirements of the boomers. The Faustian pact is built on the idea that the young bucks inherit the wealth of the boomers. Not sure what the wealth actually is though. Is it real wealth or simply the 'number go up' from monetary expansion>
Hah, this is true.
Hard to think of many developed nations doing it better. The streets of many German and Italian cities are flooded with homeless, and some areas look like a mashup between skid row in LA and a refugee camp.
NZ and Aussie are just lucky there's not many places you can get here with a rubber dinghy from.
Someone would just say "I'd like a new house please" and someone else would say "sure thing".
And then 2-3 months later there would be a house there.
Kids these days. What with their electric cars and cellular telephones. In my days you'd just aspire to a chilly-bin shape FX-GT, and no one ever complained.
More bad news adding pressure for more rate cut.
The reality is, retail numbers don’t tell the whole story, much of the spending is happening overseas because there’s little excitement or attractive options to spend on here in New Zealand. Once the overseas travel trend cools off and rates drop, the property market will likely heat up again.
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