The wind has gone out of retail sales growth.
Statistics NZ December data for electronic card transactions reports just +0.9% growth compared with December 2017, and far below the +4.6% average growth rate for each of the preceding twelve months.
One factor is the sudden dive in petrol prices which slumped -11% compared with the same month a year ago in December after rising an average of +12% in each of the July to October months.
But that masks weakness in other core retail sectors.
For example, the December growth in the sales of 'durables' was only +0.4% in December after averaging +4.2% in the rest of 2018. The December "growth" in apparel evaporated entirely, declining -4.4% in December compared to the rest of 2018 at -0.9%.
The 'consumables' sector grew +3.2% year-on-year in December, sharply down from the +4.4% in the rest of 2018. The same for hospitality which was up only +5% whereas the rest of 2018 was showing a +6.5% rise.
The value running through electronic cards for services and non-retail industries showed a similar falloff in December.
It caps a weak December quarter in an unexpected way - no analyst was expecting such a sharp drop in December.
Electronic transactions
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29 Comments
if you consider population growth of about 1.5% a year, then you have an actual decline.
The economy has actually started a decline period, will be much more clear around June/August, with more than a quarter of Growth below expectations and under population growth,
Economy grew near to 0 in 2018 and will be way below that in 2019.
(From Oz H/T MB) "Last week it was Crabtree & Evelyn. Today, menswear retailer Ed Harry has been placed into voluntary administration, placing the fate of 87 stores and nearly 500 staff in doubt. The news follows the closure of a string of Australian retailers recent times, including Marcs, Pumpkin Patch, Payless Shoes and Roger David, while department store Myer has also struggled."
Economists forecast only a 0.4 fall. additionally November was revised down . Its a big miss, another big miss.
Implications for GDP 4Q, , banks will lower their forecasts, and next weeks CPI will confirm the initial fall in petrol prices, REINZ will confirm faltering home sales. . The Reserve Bank will cut this year, only question is whether RBA strikes first.
The retail shops aren't exactly trying hard to get me to spend. Fake 60% off sales, complicated bundles, club cards, after pay, lay buy. I don't want any of this bulls#t. I want to walk in find the item I want in stock and buy it, lo-and-behold with my own money, at a decent price. Online is almost always the way to go unless the item is bulky.
NZ shops are consistently targeting chumps rather than competing on price. This is why Kathmandu and Macpac failed in the UK - not enough chumps.
With the squeeze on house prices and credit growth the shops (and their landlords) won't have enough chumps to keep this up forever.
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