NZ retail sales jump in Q2, point to robust GDP growth

WELLINGTON: New Zealand retail sales jumped in the second quarter, pointing to a rosier outlook for economic activity and pushing the New Zealand dollar to its highest in nearly two weeks.

Retail sales volume rose a seasonally adjusted 1.1% in the second quarter, data from Statistics New Zealand showed yesterday, posting annual growth of 3.1%.

The New Zealand dollar rose around 0.2% to $0.6722, its highest since Aug 9.

The strong showing suggested second-quarter gross domestic product (GDP) would overshoot the Reserve Bank of New Zealand’s (RBNZ) forecast of 0.5%.

The result reduced the risk of a sharp slowdown that might have pushed the RBNZ into cutting the official cash rate (OCR) from its current record low of 1.75%.

“Strong retail volumes are consistent with our 0.9%... pick for Q2 GDP... the hurdle to a near-term OCR cut by the RBNZ remains high,” said Mark Smith, senior economist at ASB Bank.

That would mark a welcome acceleration from the 0.5% pace seen in the first quarter.

RBNZ Governor Adrian Orr flagged earlier this month that downside risks to GDP projections were growing due to weak busi- ness confidence. Any further slowdown could tip the balance in favour of an interest rate cut.

The faster pace of retail sales was broadbased but led by hardware and building sup- plies, which jumped 4.7%.

Department store spending rose 2.8%, while food and beverages climbed 1.7%.

Second-quarter GDP data is due on Sept 20. — Reuters