Retail sales volumes had their strongest quarterly increase in six years, Statistics New Zealand said today. The announcement gave further impetus to the already rampant Kiwi dollar, which hit new post-float highs.
After adjusting for seasonal effects, the volume of total retail sales rose 2.1 % compared with the September 2012 quarter. The last time sales volumes rose as strongly was in the December 2006 quarter.
The news sent the already buoyant New Zealand dollar even higher as it achieved a new post-float high on the Trade Weighted Index basket of currencies of 77.3. The flying Kiwi topped the US85c mark, reaching its highest level against the greenback since August last year.
“Twelve of the 15 retail industries had higher sales volumes in the latest quarter,” business statistics manager Blair Cardno said.
The industries that led this quarter’s increase were: fuel retailing, hardware, building, and garden supplies retailing, motor vehicle and parts retailing.
“This is the second large increase in a row for the hardware, building, and garden supplies industry, which was again boosted by stronger-than-usual sales in Canterbury,” Mr Cardno said.
When price effects are included, the value of total retail sales rose 1.7 percent.
ASB economist Daniel Smith said the retail figures were much stronger than expected, providing some encouragement that the economy bounced out of its third quarter soft patch to good effect.
He said the economic data picture has been a little clouded lately, with the Household Labour Force labour market data for Q4 particularly weak, but retail spending apparently very strong.
"The true state of the economy probably lies somewhere in the middle, with most indicators pointing to a gradually improving economy being led by increasing construction activity in Canterbury," he said.
Part of the four quarter retail strength also appeared overstated by larger than normal seasonal movements in fuel sales over 2012.
"From an inflation viewpoint, today’s data reinforce the view that pricing pressures remain very weak, although part of that will be due to the strong NZD. With inflation pressures remaining muted, we continue to expect that the RBNZ will keep the OCR on hold until March 2014."
South Island sales values were up 1.9 percent in the December 2012 quarter, while sales values in the North Island rose 1.3 percent.
Statistics NZ says the trends for total sales volume and total sales value have been generally rising since low-points in 2009.
Immediately following the announcement, the NZ dollar surged higher, passing through 77.5 on the TWI. Live rates are here »
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12 Comments
I keep posting this everywhere and keep getting +1 and likes for it, but it seems to be taking a while to sink in...
back in the good old pre-GCF days when house prices were inflating madly, people were pulling some of that equity out and using it to spend. It's estimated that this extra spending bumped (already high retail) spending up by around 10%.
Now, not only are people no longer removing equity, they are paying down debt, which is depressing retail by abount 10% So there's a 20% drop in retail spending already.
Factor in the shift to Internet shopping, which is taking anywhere between 10-20% of retail spending from bricks and mortar, and the obvious conclusion is...
Brick and Mortar retail needs to contract by at least one third. Maybe even more. Permanently. 1/3 to a 1/2 less high street shops, malls, and retail outlets. While there may be the odd blip on the way down like the one reported above, the trend will remain downwards until all that retail space has been redeveloped into something else.
you know how when you are standing on a level platform and something goes past you heading down, like an external elevator, it can seem like it's you that's going up, not them going down.
Thus it is with the NZ$. Everyone else in the world (apart from Australia) is engaging in stealth or not-so-stealth currency devaluation. The good old Kiwi, which really has no mind of it's own and just follows the AU$ everywhere, is hanging onto the Aussie and feeling like it's part of the wild ride upwards when in reality everyone else is going down.
p.s. going up in the above scenario is not a good thing.
Given the relative strength of the NZ$ and the effect that must have on imports and the price of shiny things from South Korea, that small blip in retail spending is rather worrying.
And with Kiwi getting so close the the US$, the currency in which oil is bought and sold, petrol prices in NZ must be dropping back down to 1$/litre or less, which surely must be freeing up a load of discretionary spending...
"And with Kiwi getting so close the the US$, the currency in which oil is bought and sold, petrol prices in NZ must be dropping back down to 1$/litre or less, which surely must be freeing up a load of discretionary spending..."
That would be a Tui ad right there Stan. Petrol pump prices have increased fairly significantly over the past couple of weeks.
Again, I dont think your off the cuff remark works, the economics dont appear to stack up.
eg
A MiEV is $65k its petrol equiv is $20k? So $40k in the bank earning interest...even at 2.5% is $1k in interest, how much mileage do you do in a town car? $1k is 500 litres at say 14km per litre? = 7000km.
Or do it a different way, how most ppl do it, HP on a 20k car v a 65k car? huge difference in monthly costs I would think. Say its 7% ie you increase your mortgage...for 5 years, whats the impact over 5 years of 45k at 7%?
Then consider the costs over say 20 years, the life of the petrol small car, you would have to pay at least 1.5 MiEv=Vs if not 2.
Now the EV should cost less to service, not sure on insurance costs, I suspect the MiEv will set you back a lot more to insure.
How many orgainary families can afford a new car at 20k thats worthless at the 10~12year mark?
ergo there will not be much of an EV revolution.
Happy to see a model / spreadsheet showing otherwise....started to work on one myself but decided to give up.
regards
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