Retail activity picked up on a seasonally adjusted basis in the December quarter following two quarters of falls.
And actual sales volumes were also up (slightly) when compared with the December 2023 quarter.
Statistics NZ says the total volume of retail sales in New Zealand increased by 0.9% in the December 2024 quarter compared with the September 2024 quarter. The figures are adjusted for price inflation and seasonal effects.
Westpac senior economist Satish Ranchhod described the quarterly rise in spending as "solid" and said it was slightly ahead of Westpac's forecast for a 0.7% rise.
This is the first rise in seasonally-adjusted quarterly sales volumes since March 2024. And the March figures proved to be very much as one-off, as they had broken a cycle of eight consecutive quarters of shrinking sales volumes going back to March 2022. It's been a long period of decline for the retail industries.
Stats NZ's economic indicators spokesperson Michael Heslop said in the December quarter there was "a modest increase in retail activity", with growth across most industries.
Of the 15 retail industries, 10 had higher retail sales volumes in the December 2024 quarter, compared with the September 2024 quarter, after adjusting for price and seasonal effects.
Key facts provided by Stats NZ included:
- total volume of seasonally adjusted retail sales was $25 billion, up 0.9%
- total value of seasonally adjusted retail sales was $30 billion, up 1.4% ($422 million)
- all 16 regions had higher seasonally adjusted sales values
- total value of actual retail sales was $33 billion, up 0.2% ($60 million), compared with the December 2023 quarter
- total value of actual stock as at 31 December 2024 was $9.4 billion, down 0.5% ($49 million) compared with 31 December 2023.
Stats NZ's retail trade survey measures the sales and stock of businesses that provide household and personal goods and services – for example car yards, petrol stations, supermarkets, cafes and restaurants, and hotels.
Westpac's Ranchhod said the widespread increase in spending in discretionary areas in the latest quarter points to a firming in households’ spending appetites.
"That’s consistent with the reduced pressure on households’ finances as inflation and interest rates have fallen, as well as the rise in consumer confidence in recent months.
"We did see spending on groceries dropping back, but in part that will reflect that people have chosen to spend more on dining out."
Ranchhod expects spending levels will continue trending higher over the coming year.
"Interest rates have continued to drop. Importantly, the full impact of those declines is yet to be felt, as many mortgages are still on the relatively high interest rates from recent years. However, over the next six months, around half of all mortgages will come up for re-fixing, and many borrowers will have the opportunity to re-fix at lower rates. That will give spending a boost, especially through the second half of the year."
The Westpac economists are forecasting a 0.3% rise in GDP over the December quarter.
"Today’s result was a little ahead of our expectations. However, we’ll take a closer look at how our forecast for GDP growth is shaping up over the next couple of weeks as additional data on December quarter activity is released," Ranchhod said.
1 Comments
Reminder that cheaper fuel prices have freed up more disposable income for households than mortgage rate reductions (so far). But, obviously, all the commentariat nod wisely at the idea that households are spending more on other stuff because RBNZ have wiggled the OCR down. Remember, the current average effective mortgage rate is exactly the same as it was a year ago - but total mortgages outstanding have increased by around $10 billion.
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